Did You Know?

from Age-Friendly College Park

The current federal budget, known as the “One Big Beautiful Bill,” has positive tax implications for older Americans, including a higher standard deduction and a “bonus” temporary tax deduction for people 65 and older. Here are some things to keep in mind as you think about filing your 2025 taxes. Consult your tax professional for more information on how these changes could impact you.

1. Higher standard deduction:

For tax year 2025, the standard deductions are:

  • $31,500 for married couples filing jointly
  • $15,750 for single filers and married individuals filing separately
  • $23,625 for heads of household

If you are over 65, you probably already know that people over 65, or blind, receive a boost to the standard deduction. For tax year 2025, the additional standard deduction for single filers and heads of households over 65 is $2,000. For married couples filing jointly, the additional deduction is $1,600 per qualifying spouse, or $3,200 if both are over 65.

2. “Bonus” deduction for older adults:

Here’s the big news: The bill provides targeted tax relief for older adults in the form of a $6,000 “bonus” deduction that could offset federal taxes on Social Security benefits for some.

The full deduction is available to taxpayers age 65 and older with a modified gross adjusted income (MAGI) of up to $75,000 for an individual filer and $150,000 for a couple filing jointly. (Each spouse can take the deduction, for a total of $12,000, if both are 65 or older.)

The deduction is reduced for higher earners, up to $175,000 for a single filer and $250,000 for a couple. (Above those thresholds, you don’t qualify.)

You can claim this new “bonus” deduction whether you itemize or take the standard deduction. Right now, this bonus deduction is set to expire in 2029. Speak with your tax advisor for more information on how this will impact you.

3. (Much) Higher State and Local Tax (SALT) deduction cap:

If you itemize your deductions on your tax return, you can deduct certain state and local taxes (SALT) you paid during the year. This includes state and local income or sales taxes (whichever is higher), real estate taxes and qualified personal property taxes.

The SALT deduction was capped at $10,000 from 2018 to 2024, but the limit for the 2025 tax year jumps to $40,000 for single filers and married couples filing jointly ($20,000 per person for married couples filing separately). The higher cap makes it easier to fully deduct your state and local taxes, and it could make itemizing a better option than the standard deduction for some people. The higher cap on the SALT deduction is phased out for higher income filers. Again, check with your tax professional for more information.

This information is taken from the IRS website.

Brought to you by Age Friendly College Park, part of the AARP Age Friendly Communities network. The Age Friendly College Park initiative is sponsored by the Mayor and Council of the City of College Park, and coordinated by the Department of Youth, Family and Senior Services and the City’s Senior Advisory Committee. For more information or to volunteer, please contact agefriendlycommunity@collegeparkmd.gov.