7 Tax Breaks for Older Taxpayers

The Internal Revenue Code has long had much to offer taxpayers who are 50 or older, nearing retirement or already in their golden years. And the One Big Beautiful Bill Act (OBBBA), enacted last July, expanded several tax breaks and added new opportunities for older taxpayers. Whether you're in this age group and preparing your 2025 federal income tax return or looking to optimize future tax outcomes (or both), here are seven tax breaks to consider.

1. Additional Standard Deduction

Regardless of age, taxpayers who choose not to itemize deductions are entitled to the standard deduction for their filing status. The Tax Cuts and Jobs Act (TCJA) of 2017 approximately doubled the standard deduction amounts, and the OBBBA made those increases permanent and further increased the amounts for 2025 to:

• $15,750 for single filers (up from $15,000 before the OBBBA),
• $23,625 for heads of households (up from $22,500) and
• $31,500 for married couples filing jointly (up from $30,000).

These amounts will be inflation adjusted for 2026 and beyond.

Additional standard deduction amounts are allowed for individuals age 65 or older or blind. For 2025, these amounts are $2,000 for an unmarried individual age 65 or older or blind, or $1,600 for a married person age 65 or older or blind. (These amounts are doubled if the individual is both over age 65 and blind.)

So, for instance, if you're a joint filer claiming the standard deduction and you and your spouse are both in your late sixties (and not blind), your additional deduction is $3,200.

2. Senior Deduction

The OBBBA provides a new tax break for many taxpayers age 65 or older. For 2025 through 2028, taxpayers in this age group may be able to claim a deduction of up to $6,000. If both spouses of a married couple filing jointly are age 65 or older, each spouse may be eligible for a separate senior deduction of up to $6,000—for a combined total of up to $12,000. This deduction is available whether you itemize or not.

But there's a catch. The senior deduction is phased out based on modified adjusted gross income (MAGI). The phaseout begins at $75,000 of MAGI for single filers or $150,000 for joint filers. It phases out completely when MAGI exceeds $175,000 or $250,000, respectively.

3. Catch-Up Contributions

Taxpayers who max out their annual contribution limits for employer-sponsored retirement plans, such as 401(k)s, as well as for IRAs, can up the ante after reaching age 50 with catch-up contributions. These are amounts you can contribute in addition to your regularly allowed contributions and any employer matches you might receive. For instance, in 2026, taxpayers age 50 or older can add:

• $8,000 to the maximum 401(k) deferral of $24,500 for a total contribution of $32,500 or
• $1,100 to the maximum traditional or Roth IRA contribution of $7,500 for a total contribution of $8,600.

Catch-up contributions are annually indexed for inflation.

Important: Beginning in 2026, the SECURE 2.0 Act requires the 401(k) catch-up contributions of higher-income taxpayers to be treated as post-tax Roth contributions. In 2026, the requirement generally applies to taxpayers who earned more than $150,000 in 2025. This threshold will be annually indexed for inflation.

4. Super Catch-Up Contributions

Under SECURE 2.0, starting in 2025, a slightly older age group of employees—those who are age 60 to 63 at the end of the tax year—can boost their catch-up contributions to most employer-sponsored plans to 150% of the amount allowed for those age 50 and over. (Once you reach age 64, the regular catch-up contribution limit is reinstated.)

The limit for these "super" catch-up contributions in 2026 is $11,250 (the same as in 2025). So, if you'll be 60, 61, 62 or 63 on December 31, 2026, you can potentially contribute up to $35,750 to a 401(k) this year—the maximum deferral of $24,500 plus a super catch-up contribution of $11,250.

Important: The aforementioned Roth requirement for higher-income taxpayers, including the annually indexed income threshold, applies to super catch-up contributions, too.

5. Spousal IRAs

Married couples can take advantage of a retirement-savings tax break if only one spouse works. That is, the couple may set up an IRA in the nonworking spouse's name—often called a "spousal IRA"—based on the working spouse's earned income. This can be particularly helpful when one spouse has retired and the other is still working.

For instance, let's say 55-year-old Irma earns $100,000 a year while her 65-year-old spouse, Irving, has already retired. The couple can contribute up to $17,200 to IRAs in 2026—$8,600 to Irma's IRA and another $8,600 to Irving's spousal IRA. Depending on income levels and participation in workplace retirement plans, these contributions may be fully or partially deductible under the usual IRA rules.

6. Penalty-Free Retirement Plan Distributions

Reaching age 59½ is a key milestone when it comes to taking distributions from IRAs, 401(k)s and other qualified retirement plans. Normally, a 10% tax penalty—on top of your regular income tax liability—is assessed on retirement plan withdrawals before that age unless a special exception applies.

If you're retiring before age 59½ and need to make retirement plan withdrawals, consider this penalty exception: You can take substantially equal periodic payments (SEPPs) under one of three IRS-approved methods. SEPPs are based on your life expectancy or the joint life expectancy of you and a designated beneficiary. Complying with the SEPP rules can be complicated. You may want to involve your SSB tax advisor if you're considering this option.

7. Qualified Charitable Distributions

Generally, distributions from traditional IRAs are taxed at ordinary income rates—even if you subsequently donate the funds to charity. Charitable contributions may be deductible if you itemize, and a more limited deduction will be available to nonitemizers for the 2026 tax year.

However, if you're older than 70½, you can transfer IRA funds directly to a qualified charity with no federal income tax consequences. Although you can't claim itemized deductions for these qualified charitable distributions (QCDs), their tax-free treatment equates to a 100% deduction because you'll never be taxed on those amounts. QCDs also count toward required minimum distributions.

There is an annual limit for QCDs, but it's indexed for inflation every year. In 2026, the QCD limit is $111,000 (up from $108,000 in 2025). If you and your spouse both qualify, you can transfer twice that amount tax-free.

Moreover, QCDs aren't included in your adjusted gross income (AGI) or MAGI. Among other benefits, this lowers the odds that you'll be affected by income-based phaseouts and reductions of various tax breaks, such as the AGI ceiling on charitable contributions or the MAGI limit on the new senior deduction. Also, lowering AGI can potentially limit Medicare premium surcharges, exposure to the net investment income tax and the taxation of Social Security benefits.

In addition, SECURE 2.0 authorized eligible taxpayers to make a one-time QCD transfer to a charitable remainder trust or charitable gift annuity. Annually indexed for inflation, the limit on such tax-free transfers is $55,000 in 2026 (up from $54,000 in 2025).

A Note on Required Minimum Distributions

Once you reach a certain age, you must begin taking required minimum distributions (RMDs) annually from traditional IRAs and most employer-sponsored retirement plans. Under current law, that age is 73 (up from 72 under previous rules). For those born in 1960 or later, the age will increase to 75 in 2033. (With inherited IRAs, RMDs may need to be taken sooner, depending on factors such as the beneficiary's relationship to the original owner and when the beneficiary inherited the IRA.)

However, if you're still working full-time and aren't a 5%-or-more owner of the company you work for, you generally can delay RMDs from that employer's plan until you retire. Furthermore, RMDs don't apply to Roth accounts during your lifetime.

Generally, RMDs are taxed at ordinary income rates. But any amount attributable to a return of basis (such as from nondeductible traditional IRA contributions) is tax-free.

Identify and Leverage

Tax rules affecting older taxpayers continue to evolve and, as you can see, recent legislation has added several new opportunities for tax savings. Of course, eligibility requirements, income limits and phaseouts can affect how much you'll benefit. Ask your SSB tax advisor for help identifying which tax breaks are available to you and how to leverage their positive impact.

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