What changes have been made to the special deduction for seniors in recent tax years?
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The special deduction for seniors—meaning taxpayers age 65 or older—has undergone significant changes in recent tax years, especially with the enactment of the One Big Beautiful Bill Act (OBBBA) in July 2025. Here is a detailed summary of the changes, with references to the relevant law and guidance:
1. Pre-2025 Law: Additional Standard Deduction for Seniors
- Prior to 2025, seniors (age 65 or older) were entitled to an additional standard deduction amount on top of the base standard deduction. For example, in 2024, the additional standard deduction was:
- $1,950 for single or head of household filers,
- $1,550 per spouse for married filing jointly or separately, and for qualifying surviving spouses.
- This additional amount was available to both itemizers and non-itemizers, and was also available for blindness.
2. 2025 and After: The One Big Beautiful Bill Act (OBBBA) Changes
A. New “Bonus” Senior Deduction (2025–2028)
- Starting in 2025, the OBBBA created a new, temporary “bonus” deduction for seniors age 65 or older.
- Amount: $6,000 per qualifying individual (i.e., $12,000 for a married couple if both are 65+).
- Eligibility: Taxpayer must be age 65 or older by the last day of the taxable year. The deduction is available to both itemizers and non-itemizers.
- Phaseout: The deduction phases out at a 6% rate for income above $75,000 (single) or $150,000 (joint), and is fully phased out at $175,000 (single) or $250,000 (joint).
- Duration: Applies to tax years 2025 through 2028.
B. Additional Standard Deduction Remains
- The additional standard deduction for age/blindness continues to exist, but the amounts have been updated:
- For 2025, the additional standard deduction is $2,000 for single/head of household, $1,600 per spouse for married filing jointly/qualifying surviving spouse/married filing separately.
- This is in addition to the new $6,000 “bonus” deduction.
C. Base Standard Deduction Increased
- The OBBBA also increased the base standard deduction for all filers, including seniors:
- For 2025: $15,750 (single), $23,625 (head of household), $31,500 (married filing jointly/qualifying surviving spouse), $15,750 (married filing separately).
- These amounts are indexed for inflation.
D. Personal Exemption Remains Suspended
- The personal exemption, which was $4,050 per person in 2017, remains suspended (set to $0) permanently under the OBBBA.
3. Summary Table for 2025 (for a Single Senior Age 65+)
Note: The “bonus” deduction phases out for higher incomes as described above.
4. Policy Rationale and Impact
- The OBBBA’s new “bonus” deduction for seniors is designed to provide additional tax relief to older Americans, especially those with moderate incomes. It is available regardless of whether the taxpayer itemizes deductions.
- The deduction is temporary (2025–2028), after which it is scheduled to expire unless extended by future legislation.
- The phaseout ensures the benefit is targeted at low- and middle-income seniors.
5. Legal References
- Internal Revenue Code §63(c), as amended by OBBBA (H.R. 1, July 4, 2025): Standard deduction and additional standard deduction for age/blindness.
- IRC §151(d)(5)(C): Temporary “bonus” deduction for seniors.
- IRS Fact Sheet FS-2025-3 (July 2025): Details on the new senior deduction and phaseout.
- Tax Foundation FAQ on OBBBA: Policy summary and phaseout details.
In summary: For tax years 2025–2028, seniors age 65 or older benefit from a new $6,000 “bonus” deduction (subject to income phaseout), in addition to the increased base and additional standard deductions for age/blindness. The personal exemption remains suspended. These changes provide substantial additional tax relief to seniors, especially those with low to moderate incomes.
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