Let’s face it—keeping up with tax rules can be overwhelming, especially when they keep changing! If you or someone you care about is 65 or older, there’s some good news with One Big Beautiful Bill Act (OBBBA), which brings some tax breaks that could really help out. Let’s walk through what’s new and what it means for you.
The Standard Senior Deduction: What Was Already Available
Before the OBBBA came along, seniors 65 or older could get an extra boost at tax time. If you’re filing solo, you got an extra $2,000 off your taxable income. Married and filing together? Each qualifying spouse could knock off $1,600. This little bonus helped a lot, but only if you took the standard deduction—not if you itemized.
What’s New: The OBBBA Senior Deduction in a Nutshell
Here’s where things get more exciting. The OBBBA brings in a generous new deduction(effective 2025-2028)—$6,000 for each qualifying senior. That means a total of $12,000 total for a married couple where both spouses qualify! That’s a big jump from before, and it’s designed to give you even more of a break at tax time!
More Flexibility: Itemizers Welcome!
This next part is a game-changer. Unlike the old senior deduction, which you could only use if you didn’t itemize, the new $6,000 OBBBA deduction is available even if you do. Woohoo! So whether you itemize or stick with the standard deduction, you’re set to benefit.
Heads Up: Phase-Out for Higher Incomes
There’s a small catch for those with higher incomes. This new deduction isn’t a flat amount for everyone. If you’re a single filer earning above $75,000 or a married couple with more than $150,000 in income, your deduction starts to shrink. It drops at a rate of 6% of your modified adjusted gross income over those limits. So, higher earners may see the deduction fade away.
So, What Does This Mean for You?
All in all, the OBBBA is giving seniors a much bigger tax break, especially if your income is moderate. If you’re 65 or older, you can take advantage of both the old and new deductions—even if you itemize. Just keep an eye on your income level to see how much of a break you’ll get.
Final Thoughts About OBBBA and Seniors
Tax stuff doesn’t have to be scary or confusing. A little planning goes a long way and we encourage you to chat with your tax professional—they’ll help you sort through the options and make sure you’re getting every deduction you deserve. The important thing is to stay informed, so you can enjoy your retirement with a little extra peace of mind (and maybe a bit more money in your pocket)!
If you have any questions, give us a call at 508-212-1818 or schedule a consultation about the impact of OBBBA on seniors today!