When Congress passed the One Big Beautiful Bill (OBBB), the headlines focused on business deductions, bonus depreciation, and the fate of the SALT cap. But tucked neatly inside the bill was a new perk for seniors — and it’s one worth paying attention to.
The New $6,000 Deduction for Seniors
Beginning in 2025 and running through 2028, taxpayers who are 65 or older can claim an additional $6,000 deduction. If you’re married and both spouses qualify, that’s a total of $12,000 extra off your taxable income.
And here’s the kicker: this is on top of the existing senior deduction and the standard deduction.
Let’s break it down:
- Single senior in 2025: $15,750 (standard) + $2,000 (existing senior deduction) + $6,000 (OBBB bonus) = $23,750 total.
- Married couple 65+ in 2025: $31,500 (standard) + $3,200 (existing senior deduction) + $12,000 (OBBB bonus) = $46,700 total.
That’s a meaningful reduction in taxable income, even before considering any other tax strategies.
Who Qualifies?
To take the deduction, you must:
- Be 65 or older by December 31 of the tax year,
- Provide a valid Social Security number, and
- If married, file jointly to claim the full deduction.
The deduction phases out for higher incomes:
- Over $75,000 MAGI for single filers,
- Over $150,000 MAGI for joint filers,
with a full phase-out at $175,000 and $250,000 respectively.
It’s also available to both standard deduction takers and itemizers, which makes it more flexible than many other tax breaks.
Social Security Tax Relief (Sort Of)
Technically, the OBBB doesn’t change the taxation rules for Social Security benefits. But practically speaking, this new deduction means that 88% of seniors won’t pay federal tax on their benefits at all.
Why? Because the bigger deductions eat away at the portion of income that would normally push Social Security into taxable territory. In other words, the math does the heavy lifting here.
Don’t Forget the Clock
This deduction isn’t permanent. Unless extended, it will sunset after 2028. That gives seniors (and their advisors) a four-year window to adjust planning strategies — including retirement withdrawals, Roth conversions, and Social Security timing — to maximize the benefit while it lasts.
Bottom Line
The OBBB created a real win for seniors. For many, it means keeping more of their Social Security in their pocket and reducing taxable income by thousands.
At RCC, we focus heavily on helping business owners stay compliant with IRS reasonable compensation rules — but good tax planning is holistic. Whether you’re still running a business or fully retired, opportunities like this new deduction can make a big difference in your long-term financial picture.
Want to learn more about how smart planning (including reasonable compensation for S corp owners) fits into your tax strategy? Visit Reasonable Compensation Calculated to see how we can help.
