The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4th, 2025. One key change included as part of the tax bill is the creation of the Bonus Senior Deduction—an enhanced tax benefit designed to increase deductions available to qualifying seniors (age 65 and older) for tax years 2025 through 2028. Below are key points to note regarding eligibility, increased deduction thresholds, and how the new provisions impact senior taxpayers.
What Has Changed?
- Temporary additional $6,000 deduction per eligible individual senior for tax years 2025-2028
- To qualify, taxpayer or spouse must be 65 on or before the last day of the taxable year and filing status must be Single or Married Filing Jointly
- The deduction is subject to income limitations and phases out for taxpayers with modified adjusted gross Income over $75,000 ($150,000 for joint filers)
- This is an addition to the existing standard deductions for age and blindness deduction which is $2,000 ($3,200 for joint filers)
- Deduction is available for both itemizing and non-itemizing taxpayers
Recommendations
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Know your Modified Adjusted Gross Income (MAGI) and plan accordingly to maximize your senior deduction for tax years 2025-2028
- Be careful with Roth conversions and understand the effective tax rate of conversions if they will reduce or eliminate your senior deduction due to the income phaseout
- Consider Qualified Charitable Distributions (QCDs) and other opportunities to reduce MAGI to optimize your senior deductions for eligible years
If you have any questions about the opportunities listed above, or if you would like to schedule an appointment to understand the impact of these changes on your situation, please do not hesitate to contact our team. Appointments can be scheduled online by visiting our homepage at www.ongandcompany.com.