If you’re 65 or older, there’s a new tax benefit heading your way starting with the 2025 tax year—and it could make a meaningful dent in your tax bill. Tucked into recent federal legislation, this new deduction is designed specifically for older Americans. But, as with most tax code changes, the details matter.

Let’s walk through what’s actually happening and how you can prepare to take full advantage of it.

A New Deduction for Older Taxpayers

Beginning in 2025, individuals age 65 and up may be able to claim a brand-new tax deduction of up to $6,000 per person—or $12,000 per couple if both spouses meet the age requirement.

This deduction is in addition to the standard deduction and the existing age-based add-on that retirees have been used to claiming for years. For example, in 2025, a qualifying single taxpayer could potentially combine the base standard deduction, the age-based boost, and this new deduction for a total deduction of nearly $24,000. For couples, that could approach $47,000.

However, there are income limits that determine whether you’ll qualify for the full amount.

Income Limits and Phaseouts

If your modified adjusted gross income (MAGI) is under $75,000 (or $150,000 for joint filers), you’re eligible to claim the full deduction. But as your income climbs above those thresholds, the benefit shrinks. Specifically, it’s reduced by six cents for every dollar over the limit.

Here’s a quick example: Say you’re single with a MAGI of $100,000. That’s $25,000 over the limit. Multiply that by 6% and your deduction is reduced by $1,500—bringing your new deduction down to $4,500.

Once your income hits $175,000 for individuals or $250,000 for couples, the deduction disappears entirely

Do I Need to Itemize to Benefit?

Nope. This deduction applies whether you itemize or take the standard deduction. In fact, that’s one of the appealing aspects for many retirees—it adds flexibility without requiring you to comb through receipts or mortgage statements.

Even if you itemize, this new deduction stacks right on top of your other deductions. So if your itemized deductions total $30,000 and you qualify for the full $6,000 deduction, you’ll be able to subtract $36,000 from your taxable income.

What About Social Security Taxes?

There’s been some confusion around this, so let’s clear it up: This new deduction does not eliminate federal income taxes on Social Security benefits. The way those benefits are taxed remains unchanged.

That said, this deduction could indirectly reduce your tax on Social Security. Why? Because whether your benefits are taxable depends on something called provisional income—a formula that includes half your Social Security income, plus other sources of income like IRA withdrawals and investment income.

Lowering your taxable income with this deduction might nudge your provisional income below the taxable threshold of $25,000 (single) or $32,000 (joint), meaning less—or even none—of your Social Security would be taxed.

Temporary Window, Potential Long-Term Impact

As it stands now, this deduction is only available for the 2025 through 2028 tax years. That gives retirees a four-year window to benefit—unless Congress decides to extend or modify the provision.

It’s also worth noting that reducing tax revenue from Social Security benefits affects the financial health of the program. Taxes on those benefits currently help fund the system, and any reduction in that income could potentially hasten the depletion of Social Security’s reserves if no other legislative action is taken.

So, What Should You Do?

If you’re nearing or in retirement, this new deduction is another reminder of how important tax planning is in these years. This is especially true if you have significant assets in tax-deferred accounts. A carefully executed Roth conversion strategy could help lock in today’s lower tax rates while setting you up for more flexibility down the road.

I often tell clients: You don’t need to predict the future, but you do need to prepare for it. That means creating a plan that considers future tax law changes—like this one—and making the most of the opportunities that exist right now.

If you want to discuss how this deduction might affect your personal situation, or explore strategies like Roth conversions, income smoothing, or asset location adjustments, I’d be happy to help.

This article is for general informational purposes only and should not be considered personal tax advice. Please consult with a qualified CPA regarding your specific tax situation.

Philip Lockwood | Founder + Managing Partner

Address | 1501 Ingersoll Ave. Suite 201 Des Moines, IA 50309 Phone: 515-274-8006

Email | Plockwood@parklandrep.com Website | Lockwood Financial Strategies   Securities offered through Parkland Securities, LLC, member FINRA (FINRA.org) and SIPC (SIPC.org). Investment Advisory services offered through SPC, a Registered Investment Advisor. Lockwood Financial Strategies, LLC is independent of Parkland Securities, LLC and SPC   Securities offered through Parkland Securities, LLC, member FINRA/SIPC.