A major new tax break for older Americans has arrived. As part of the recently passed “One Big Beautiful Bill,” taxpayers aged 65 and older are now eligible for a new $6,000 deduction, starting with their 2025 tax return and continuing through 2028. After that, the deduction is set to expire unless Congress extends it. So, it is not a permanent deduction; it applies only to tax years 2025 through 2028. Congress may choose to extend or make it permanent in the future.

However, some conditions and confusion remain. The deduction phases out for higher incomes and does not eliminate taxes on Social Security benefits, despite some misconceptions. Here’s what you need to know:

To qualify, you must be at least 65 years old by the end of the tax year and have a modified adjusted gross income (MAGI); which is $175,000 if filing as single and $250,000 if married filing jointly (both spouses must be 65+ to claim the full benefit).

The deduction is up to $6,000 per eligible taxpayer and up to $12,000 per couple (if both are 65+ and filing jointly).

But the deduction phases out based on income and begins to reduce once MAGI exceeds $75,000 (single) or $150,000 (joint). It phases out completely at $175,000 (single) or $250,000 (joint). The reduction rate is 6 cents per dollar over the threshold.

Example: If you’re single with a MAGI of $100,000 (i.e., $25,000 over the threshold), your deduction is reduced by $1,500 (6% of $25,000), leaving you with a $4,500 deduction.

The good news is that the deduction does NOT replace the existing 65+ Deduction. It is in addition to the existing extra standard deduction for seniors, which is $2,000 for single filers and $1,600 per qualifying spouse for joint filers

So, in 2025, a qualifying 65-year-old single filer could deduct the $15,750 (standard deduction), plus $2,000 (existing senior deduction), and $6,000 (new deduction) totaling  $23,750.

A qualifying couple could deduct up to $46,700. Plus, you can claim the full amount of this new deduction. For example, if you are single, 65, and itemize $40,000 in deductions, adding the $6,000 deduction reduces your taxable income by $46,000.