How older adults can increase their tax refunds using a new deduction available for 2025 filings

Understanding the New Senior Tax Deduction for 2025

While many older adults are eager for new tax relief, there is a risk that retirees and others may overlook the latest enhanced deduction for seniors on their 2025 federal tax returns, mistakenly believing it is applied automatically.

That is not the case.

Another common misconception is that Social Security benefits are no longer taxable on 2025 returns. In reality, these benefits can still be subject to federal taxes.

For those who qualify and pay close attention to the updated requirements, the 2025 tax year could bring larger refunds and lower tax bills for many seniors.

A recently introduced, temporary "senior bonus" allows eligible taxpayers aged 65 and above, within certain income thresholds, to deduct up to $6,000 from their federal taxable income. However, to claim this benefit, you must complete a new form—Schedule 1-A, designated for "additional deductions."

If you skip this form, you will miss out on the much-discussed extra tax break for seniors included in the One Big Beautiful Bill Act, which became law on July 4.

Potential Tax Savings for Seniors

The amount you save depends on your tax bracket. For instance, if you are a single filer aged 65 or older in the 12% tax bracket, the $6,000 deduction could reduce your tax bill by $720.

Tax expert Tom O’Saben cautions that this new deduction may be frequently overlooked, especially by seniors who typically file straightforward returns and have not needed to complete additional schedules in the past.

Many may assume this deduction is automatically included, similar to the existing extra standard deduction for those 65 and older. However, this new benefit requires additional paperwork.

As O’Saben, an enrolled agent and director at the National Association of Tax Professionals, explains, "It is not part of the standard deduction."

This enhanced deduction is in addition to the current extra standard deduction for seniors who do not itemize. For 2025, the extra standard deduction is $2,000 for single filers and $1,600 per qualifying spouse for married couples filing jointly.

Using tax software or consulting with a tax professional can help navigate these new forms. April Walker, senior manager for tax practice and ethics at the American Institute of CPAs, notes that most tax software begins by asking questions rather than requiring you to fill out forms manually.

How Tax Software Can Help

By entering your date of birth, tax preparation software will typically determine if you qualify for the enhanced senior deduction if you are 65 or older.

A temporary "senior bonus" now allows many taxpayers aged 65 and above, who meet income requirements, to deduct up to $6,000 from their federal income. To claim this, you must file the new Schedule 1-A for "additional deductions."

However, Walker points out that not everyone has access to tax software, so determining eligibility on a new schedule may be challenging for some.

The IRS states that Schedule 1-A will be used to claim recently introduced deductions, including the enhanced senior deduction, "no tax on tips," "no tax on overtime," and "no tax on car loan interest."

Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting, warns that since the enhanced senior deduction appears on page 2 of Schedule 1-A and not directly on Form 1040 or 1040SR, it may be easily missed.

One reader, James Huddleston from Canton, Michigan, wrote in asking where to claim the new $6,000 deduction on the 1040-SR. The answer: "Check Schedule 1-A, Section 5, page 2."

The IRS expects to receive approximately 164 million individual tax returns in 2026, with most being filed electronically.

No Need to Itemize for the Senior Deduction

Some baby boomers and their parents may mistakenly believe they are ineligible for the enhanced senior deduction because they take the standard deduction and do not itemize. In reality, this new deduction—like the car loan interest deduction and other new benefits—applies to both those who itemize and those who do not.

Still, even those who itemize could overlook this benefit. Luscombe explains that many non-itemizers may not realize they are eligible for deductions beyond the standard deduction, and itemizers may focus solely on Schedule A, missing the new Schedule 1-A.

The enhanced senior deduction is not found on Schedule A.

There is a risk that both do-it-yourself filers and some tax preparers may not be aware of Schedule 1-A, which is necessary to claim the enhanced senior deduction, a provision supported by AARP and others.

O’Saben adds that many are accustomed to only reviewing Form 1040 and Schedule A.

Eligibility: Age and Income Requirements

As with most tax breaks, seniors must consider their individual circumstances. Age and income restrictions mean not all retirees will qualify for the full $6,000 deduction.

• If you are currently 62 or 63, you will not be eligible for this deduction on your 2025 return. Only those aged 65 or older qualify.

Key points for older adults seeking this tax benefit:

• Social Security benefits are not required to claim the deduction: Despite widespread claims of "no tax on Social Security," you can claim the enhanced deduction even if you have not started receiving Social Security benefits.
• Age matters: The deduction applies to those born before January 2, 1961. If you are 65 or older in 2025, you can claim up to $6,000. Married couples where both spouses are 65 or older can claim up to $12,000. If one spouse passes away in 2025, the surviving spouse may still be eligible for the full deduction if filing jointly.
• Proof of age: You do not need to submit a birth certificate or passport. The IRS typically verifies age through Social Security records and prior tax filings. Documentation is only required if requested during an audit.
• Include your Social Security number: Taxpayers must provide a valid Social Security number for each qualifying individual on the return.
• Filing status: Married seniors must file jointly to claim the enhanced deduction. Couples filing separately are not eligible.
• Income limits: The deduction begins to phase out for single filers with a modified adjusted gross income (MAGI) of $75,000 and for joint filers at $150,000. The deduction is reduced by 6% for every $1,000 over these thresholds and is eliminated entirely at $175,000 for singles and $250,000 for couples filing jointly.

MAGI is calculated by adding certain types of income back to your adjusted gross income, such as excluded Puerto Rico income, some foreign income, and income excluded for residents of American Samoa.

The definition of MAGI can vary depending on the specific tax provision.

Social Security Benefits and Taxation

Social Security benefits may still be taxable: The rules regarding the taxation of Social Security benefits remain unchanged under the new law.

Walker from the American Institute of CPAs warns that if seniors mistakenly believe their Social Security is no longer taxable and omit it from their returns, it could delay processing and refunds.

Seniors with higher incomes may see no change, especially if 85% of their Social Security benefits are already taxed and they do not qualify for the enhanced deduction due to income limits.

The taxation of Social Security is based on "combined income," which includes adjusted gross income, non-taxable interest, and half of annual Social Security benefits. This calculation is separate from the one used for the new senior deduction.

Federal taxation of Social Security benefits began in 1984. According to the Social Security Administration, about 40% of recipients currently pay taxes on their benefits, though some estimates suggest the figure is slightly above 50%.

The White House Council of Economic Advisers estimated in June that the new deduction will reduce the percentage of seniors paying federal tax on Social Security benefits to just 12%, as their total deductions will exceed their taxable benefits. The One Big Beautiful Bill has been described as the largest tax break for seniors in U.S. history.

Luscombe cautions that the main issue will be if taxpayers overlook the deduction.

• For single filers, up to 50% of Social Security benefits are taxable if combined income is between $25,000 and $34,000. Above that, up to 85% may be taxable.
• For joint filers, up to 50% of benefits are taxable if combined income is between $32,000 and $44,000. Above that, up to 85% is taxable.

This means that those working while collecting Social Security, or retirees withdrawing taxable funds from retirement accounts, must consider these earnings when calculating taxes.

Important Details and Timing

• Limited time frame: The enhanced senior deduction is only available for tax years 2025 through 2028. Those turning 65 after 2028 will not qualify unless the law changes.
• Paperwork: The deduction is claimed on Schedule 1-A, specifically in part five on page 2, just above the "total additional deductions" section.