What the New Tax Law Means for Retirees
Congress just passed a major new tax bill, and we’ve been reviewing it closely – especially the changes that impact retirees. While the legislation is wide-ranging, there are a few key updates that anyone age 65 or older should know about.
Lower Tax Rates and Bigger Deductions Are Here to Stay
The lower tax brackets and nearly doubled standard deduction that were set to expire in 2025 have now been made permanent. There’s also a small bump in the standard deduction amounts:
- Single filers: increases from $15,000 to $15,750
- Married couples: increases from $30,000 to $31,500
Plus, the additional deduction for those 65 and older is still in place:
- $2,000 extra for single filers
- $1,600 extra per person for married couples
New “Senior Bonus” Deduction
Starting in 2025 and continuing through 2028, a new Senior Bonus Deduction will be available:
| Filing Status | Deduction | Full Amount If Income Under |
| Single | $6,000 | $75,000 |
| Married | $12,000 | $150,000 |
This deduction is available on top of the standard and age-based deductions.
Will Social Security Be Tax-Free?
We’ve gotten a few questions about this. The new law does not eliminate or change taxes on Social Security. However, since the Senior Bonus lowers taxable income, it could mean less of your Social Security ends up being taxed – depending on your overall income.
Larger SALT Deduction
If you itemize your deductions (less common in retirement), the limit on state and local tax, plus real estate tax deductions, has increased from $10,000 to $40,000. That could be helpful for retirees in high-property-tax states.
Even if you itemize, you can still claim the Senior Bonus deduction.
We’re Already Running the Numbers
Our planning software is already updated with the new rules. We’ll be reviewing how the changes affect your tax picture at your upcoming fall meeting.
