Seniors Get a Touch of Royal Treatment!

If you wander around the Elizabethan Gardens in Manteo, North Carolina, you’ll come across a huge statue of Queen Elizabeth I, for whom the gardens are named.   Queen Elizabeth was the daughter of King Henry VIII and Anne Boleyn.  She presided over the Elizabethan Age, a golden era for arts and exploration in England which included the establishment of the Lost Colony at Roanoke Island.  The first English child born in America, Virginia Dare, was named for her.   Elizabeth I took the throne in 1558 and governed until her death in 1603.  She was 70 years old at her death and had ruled for 45 years, making her the longest reigning (and also the last) Tudor monarch. 

With the passage of OBBBA, older American taxpayers now have a benefit that even the Queen of England never had - the Senior Deduction, limited to those aged 65 or older.

This is a temporary deduction that will only be available for tax years 2025 – 2028.  To claim the deduction, taxpayers must have a valid Social Security number, and married taxpayers must file a joint return.

Before examining the details of the Senior Deduction, let’s review the deductions that seniors are used to taking.  Each year, taxpayers must choose between taking the standard deduction or itemizing.  Since 2018, the standard deduction has been high enough that most taxpayers choose it instead of itemizing.  The 2025 standard deduction for a single filer is $15,750; married couples filing jointly are entitled to a standard deduction of $31,500.  Taxpayers who are 65 or older are allowed to take an additional $2,000 deduction if single, $1,600 per spouse if married.  If itemizing results in a larger deduction, taxpayers would choose to itemize instead, but this is rarely the case.

The new Senior Deduction is in addition to the standard deduction and the additional amount for those 65 or older.  The new deduction is $6,000 per eligible taxpayer, so married couples can get an additional $12,000 deduction.  This means a single filer over the age of 65 can potentially deduct $23,750 (standard deduction of $15, 750, plus the additional amount for those 65+ of $2,000, plus the new Senior Deduction of $6,000).  For a married couple filing jointly, the potential deduction adds up to $46,700 (standard deduction of $31,500 plus additional $1,600 each, plus the new Senior Deduction of $6,000 each).

There is one catch, however.  The new Senior Deduction is limited by income and is only fully available to single taxpayers with an Adjusted Gross Income (AGI) below $75,000 or a married couple with an AGI below $150,000.  The deduction amount is reduced by six cents for every dollar that AGI exceeds these limits.  The phase out range for single filers is between $75,000 and $175,000.  The phase out range for married filers is $150,000 to $250,000.  With the phase out ranges being relatively wide, many taxpayers who do not qualify for the full deduction will still see some benefit from the new law.

Some media outlets mistakenly called this new deduction a “no tax on Social Security” law, but that’s obviously not the case.  However, many taxpayers who are receiving Social Security benefits will qualify for this deduction.  We’ll work with our clients who are 65 or older to make sure this deduction is calculated correctly, because we know our senior clients deserve to get a bit of royal treatment!

Statute of Queen Elizabeth I at the Elizabethan Gardens in Manteo, NC