If you're 65 or older, there's a tax deduction worth keeping on your radar for the rest of 2026. The One Big Beautiful Bill Act, signed into law on July 4, 2025, created a "Senior Bonus Deduction" of up to $6,000 per qualifying person. For a married couple where both spouses are 65 or older, that's up to $12,000.
It first applied to 2025 returns that most people filed earlier this year. With tax year 2026 well underway, now is the time to think about how it fits into your plan before December 31.
The Basics
The Senior Bonus Deduction is available for tax years 2025 through 2028. After that, it goes away unless Congress extends it. The $6,000 per-person amount is set by statute and is not indexed for inflation, so the dollar figure stays the same for each of those four years.
You can claim it whether you take the standard deduction or itemize. Many older tax breaks were tied to itemizing. This one applies either way.
It also stacks on top of the additional standard deduction that's been available to taxpayers 65 and older for years. For tax year 2026, the existing age-based add-on is $2,050 for unmarried filers (not a surviving spouse) and $1,650 per qualifying person for married filers. The new $6,000 Senior Bonus Deduction comes on top of that.
So a married couple where both spouses are 65 or older and under the income threshold could see something like this on their 2026 return: $32,200 base standard deduction + $3,300 age-based add-on ($1,650 each) + $12,000 Senior Bonus Deduction = $47,500 in total deductions before considering any other items.
Who Qualifies
To claim the full deduction, you need to:
- Be age 65 or older by the end of the tax year
- Have a valid Social Security Number
- File a joint return if you're married (married filing separately doesn't qualify)
- Have modified adjusted gross income (MAGI) below the phase-out threshold
You do not need to be receiving Social Security benefits to claim it. If you delayed your benefits to age 70 and you're 67 right now, you still qualify based on age alone.
If both spouses are 65 or older, each one is individually eligible for the $6,000. A qualifying couple under the income threshold can deduct up to $12,000 combined.
The Income Phase-Out
This is where the planning gets interesting.
The deduction starts phasing out at $75,000 of MAGI for single filers and $150,000 for joint filers. Above those numbers, the deduction is reduced by 6 cents for every dollar of MAGI over the threshold. It's fully phased out at $175,000 for single filers and $250,000 for joint filers. These thresholds are also fixed by statute through 2028.
Here's what that looks like in practice.
Say you're married, both 65 or older, and your projected MAGI for 2026 is $178,000. That's $28,000 over the $150,000 joint threshold. Multiply $28,000 by 6 percent and you get $1,680 per spouse, or $3,360 total. Your combined deduction drops from $12,000 to $8,640.
A single filer with $100,000 of MAGI is $25,000 over the threshold. Their deduction is reduced by $1,500, leaving a $4,500 deduction instead of the full $6,000.
For retirees pulling income from a mix of pensions, Required Minimum Distributions, brokerage accounts, and Social Security, hitting these MAGI thresholds is easier than it might sound.
What This Deduction Does Not Do
When the bill passed in 2025, there was a lot of confusion about whether it eliminated taxes on Social Security benefits. It did not. The way Social Security is taxed at the federal level didn't change. Depending on your income and filing status, up to 85 percent of your benefits can still be subject to federal tax.
What the deduction does is reduce your overall taxable income, which can have the indirect effect of lowering what you owe on Social Security and everything else. For many middle-income retirees, that translates to a meaningful tax cut. For higher-income retirees who phase out, the benefit is partial or gone entirely.
Why 2026 Planning Matters Now
There are three tax years left in this window: 2026, 2027, and 2028. If you're approaching 65, the year you turn 65 is the year you start qualifying.
If you're already eligible and your projected income for 2026 is close to the phase-out threshold, there are still several months in the year to act. A few levers worth thinking through:
- Timing Roth conversions to avoid pushing MAGI over the threshold in years you want the full deduction
- Using Qualified Charitable Distributions (QCDs) from IRAs after age 70½ to reduce taxable income
- Coordinating when to realize capital gains across multiple years
- Spreading out large one-time withdrawals if possible
- Bunching deductible expenses into a single year to maximize itemizing in years where MAGI control is the priority
These decisions interact with a lot of other parts of a financial plan, so they shouldn't be made in isolation. But for someone right around the threshold, the difference between MAGI of $148,000 and $155,000 can be worth a few hundred to a couple thousand dollars in actual taxes.
Disclosure: This material is for informational and educational purposes only and is not intended as tax, legal, or investment advice. Tax laws are complex and subject to change. Please consult your tax professional regarding your specific situation. Dreyer Wealth Management does not provide tax or legal advice.
Sources
- Internal Revenue Service, "IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill." https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
- Internal Revenue Service, Revenue Procedure 2025-32 (2026 inflation adjustments).
- Internal Revenue Service, "Check your eligibility for the new enhanced deduction for seniors." https://www.irs.gov/newsroom/check-your-eligibility-for-the-new-enhanced-deduction-for-seniors
- Internal Revenue Service, "2026 filing season updates and resources for seniors." https://www.irs.gov/newsroom/2026-filing-season-updates-and-resources-for-seniors
- Internal Revenue Service, Publication 554, "Tax Guide for Seniors." https://www.irs.gov/publications/p554
- Internal Revenue Service, Topic No. 551, "Standard Deduction." https://www.irs.gov/taxtopics/tc551
- Public Law 119-21, One Big Beautiful Bill Act, signed July 4, 2025.