In the United States, changes in tax policies in 2026 have provided new financial planning options for taxpayers aged 65 and older.
This is mainly attributed to the “One Big Beautiful Bill” signed by President Trump last July, which provides a new $6,000 senior deduction for taxpayers aged 65 and above. Married couples meeting the age requirement and filing jointly can receive a maximum deduction of $12,000.
This provision applies to tax years from 2025 to 2028, whether the eligible seniors opt for itemized deductions or standard deductions.
To benefit from the full deduction, these elderly taxpayers’ modified adjusted gross income (MAGI) must fall below certain thresholds: $75,000 for single filers and $150,000 for married couples filing jointly.
Once income exceeds these thresholds, the deduction will gradually phase out; individuals with incomes reaching $175,000 or married couples with incomes of $250,000 will lose eligibility for this deduction completely.
Experts point out that because this policy was implemented midway through last year, retirees may not have fully utilized this tax-saving advantage yet, making planning for the next three years crucial.
Miklos Ringbauer, founder and CEO of “MiklosCPA Inc.”, a registered accountant and tax strategy firm in Southern California, stated, “This three-year window is an incredible opportunity.”
“This is three times $12,000, adjusted for inflation,” Ringbauer said, emphasizing how this allows seniors to accumulate significant savings for their futures.
Joe Elsasser, CFP and President of Covisum, a software company specializing in social security claiming, noted, “With tax changes come tax planning opportunities.”
Elsasser highlighted that the new $6,000 senior deduction applies to individuals aged 65 and above, regardless of whether they have claimed social security benefits.
The new policy takes effect from the 2025 tax year onwards. However, Ringbauer pointed out that some taxpayers aged 65 and above might not have considered the additional senior deduction, thus failing to properly plan their taxable incomes.
For example, if a 65-year-old taxpayer had exceptional stock market performance in 2025, they might not be able to enjoy the full deduction they were entitled to.
Looking ahead to the tax years of 2026 and beyond, seniors may need to consider how to keep their incomes within the thresholds for deductions.
Individuals aged 65 and older who are still working can reduce their taxable income by making contributions to retirement plans. In 2026, individuals aged 50 and above can contribute up to $32,500 to a 401(k) retirement plan.
Seniors can also consider reducing their taxable income through charitable donations.
Ringbauer stressed that individuals aged 65 and above should also pay attention to other potential sources of income, as these could impact their taxable income and eligibility for the senior deduction.
According to Elsasser, the new senior deduction can reduce not only the tax burden on social security benefits but also on other income sources. Therefore, for financially flexible taxpayers, withdrawing funds from individual retirement accounts (IRAs) or other retirement accounts during the period of this temporary deduction provision may be wise.
It is worth noting that this strategy can also help individuals aged 65 and above delay claiming social security benefits. Delaying the receipt of social security benefits allows individuals aged 65 to wait until their full retirement age—usually 66 or 67—before collecting these benefits, resulting in higher monthly social security payments.
(Credit: This article is based on CNBC’s reporting.)