Retirees filing their taxes this season are discovering a substantial surprise in line 12 of their Form 1040-SR. Thanks to the “One Big Beautiful Bill” (OBBB) provisions taking full effect for the 2026 filing season, seniors over age 65 are eligible for a new, temporary deduction that is drastically lowering tax bills and boosting refunds.
Here is the Bottom Line Up Front: If you turned 65 by December 31, 2025, you likely qualify for an additional $6,000 “Senior Bonus” deduction on top of your Standard Deduction. For a married couple where both spouses are 65+, this equals a $12,000 reduction in taxable income, potentially saving you thousands in federal taxes.
The “Stackable” Deduction Explained
Unlike previous years where you just got a small “age 65+” bump, the 2026 tax code allows you to “stack” three different deductions together.
The Math for a Single Senior (Age 65+):
- Standard Deduction: ~$15,750
- Age 65+ Adjustment: +$2,000
- New OBBB Senior Bonus: +$6,000
- Total Tax-Free Income: $23,750
This means the first $23,750 you withdrew from your IRA or received in wages is completely free of federal income tax.
Who Qualifies for the Full $6,000?
This bonus is not automatic for everyone. It comes with strict income caps designed to help middle-class retirees.
- Full Deduction: Available if your Modified Adjusted Gross Income (MAGI) is under $75,000 (Single) or $150,000 (Married).
- Phase Out: The bonus decreases by 6 cents for every dollar you earn above those limits.
- Zero Deduction: It disappears completely if you earn over $175,000 (Single).
The “Catch-Up” Contribution Surge
If you are still working part-time, the news gets better. Under the SECURE 2.0 Act, the “Catch-Up Contribution” limits for seniors aged 60 to 63 have exploded. For the 2025 tax year (filed now), you could have contributed an extra $11,250 to your 401(k), far higher than the standard catch-up. This further lowers your taxable income.
How to Claim It
You do not need to file a separate application.
- Use Form 1040-SR (Tax Return for Seniors).
- Check the box for “Born before January 2, 1961.”
- Ensure your tax software applies the “OBBB Senior Deduction” worksheet.
If you already filed and missed this, you can file an amended return (Form 1040-X) to claim the difference, which could be worth $1,000+ in actual cash refund.
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Always consult official government resources.
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