How much will you benefit from Senior Bonus Standard Deduction?
Posted on July 4, 2025
It was simple: everyone got the same standard deduction based on filing status and age. For Patti and me – both over age 65 – the current standard deduction for 2025 before the change is $33,200. Our 2025 tax return now will use a fairly complicated formula to calculate standard deduction. The new tax bill gives those over age 65 a maximum of $6,000 per taxpayer in addition to the current amount. The new Senior Bonus starts to phase out at an income level and drops to $0 at a high level of income. The maximum benefit translates to roughly $1,300 less tax per taxpayer. Most all taxpayers who pay tax on Social Security (SS) – roughly half of those who receive SS – will pay less in tax.
Details:
The $6,000 added Senior Bonus Standard Deduction is in addition to the bonus those over 65 get now: $2,000 for single filer and $1,600 for married joint filer.
The added senior bonus is not a flat amount. You get all the added bonus if your income (MAGI) is below a certain amount; you don’t get any of it if your income is above a certain amount. In between, you get a portion of the added deduction.
== How much will you save? ==
Folks over age 65 with total taxable income other than Social Security in the range of up to about $20,000 per year won’t see any benefit from greater Standard Deduction. These folks do not have a lot saved for retirement or are folks who have converted a large portion of their traditional IRA to Roth. None of their Social Security benefit is taxed, and the amount taxed at ordinary tax rates is below the current Standard Deduction: they pay no tax now. Roughly 50% of those who receive SS do not pay tax.
If you want a rough estimate at how much less each taxpayer will pay, follow these steps:
== Your benefit in 2025 may be less ==
You may have more taxable income in 2025. Those of us who take RMD will have more inflation-adjusted taxable income in 2025 than 2024 if we do not increase QCD that we used in 2024: RMD for Patti and me increased by more that 17%. That’s from the combination of increasing RMD percentage and very good portfolio returns in 2024. That means we’ll lose more of the bonus deduction than we would have on our 2024 return if we keep QCD the same amount as in 2024.
Returns were well above average last year and the real increase in RMD last year was well above average, but in average years the math of RMDs push all of us to greater inflation-adjusted taxable income until we are in our mid-80s. We’ll all lose a greater portion of the benefit of the bonus deduction over time – pay more real, inflation-adjusted taxes over time.
Conclusion: The new tax bill provides an added tax break for those over age 65. Most all who pay tax on Social Security (SS) – roughly half of those who receive SS – will benefit from Senior Bonus Standard Deduction. The effect will be a maximum reduction in tax in the range of $1,300: those with greater income will see less of a benefit.