Americans who are 65 and older got a hefty new tax break under the massive tax bill that President Donald Trump signed into law on July 4: A new bonus deduction that’s worth as much as $6,000 per taxpayer, which means up to $12,000 for married-filing-jointly spouses who are both 65+.

The new tax deduction is available this year, so if you’re eligible you can claim it on your 2025 tax return that you’ll file in 2026. Lawmakers came up with this bonus deduction as an alternative to Trump’s oft-touted goal of eliminating taxes on Social Security benefits, which would have been a more expensive and complex endeavor.

A tax deduction reduces how much of your income is subject to tax. But there are some limitations to this valuable new tax perk:

• There are income limits. The value of the tax break starts to phase out at a modified adjusted gross income of $75,000 for single filers and $150,000 for married-filing-jointly filers.
• This new tax break is temporary, in effect only from 2025 through 2028.

“The bottom line is if you’re in the modified adjusted gross income that gets this, it will save you on taxes,” says Mark Gallegos, a CPA and tax partner at Porte Brown LLC in Chicago. This puts “more money back in people’s pockets, and I think that’s the whole point,” he says.

How the new ‘senior bonus’ deduction works

This new tax break is in addition to the standard deduction and additional standard deduction that Americans who are 65 and older already can claim to reduce their taxable income.

In fact, the new law also hikes the regular standard deduction (that is, the tax benefit that’s available to just about all taxpayers) in 2025 to:

Meanwhile, the existing additional standard deduction — a tax perk that’s been available for a long time to taxpayers who are 65 and older and/or blind — in 2025 is worth $2,000 for a single filer aged 65 or older, or $3,200 for a married-filing-jointly couple if both spouses are age 65 or older (if just one spouse is 65+, the additional deduction is $1,600).

All of the above means that taxpayers aged 65 or older can now enjoy the slightly higher standard deduction, plus their regular additional standard deduction, plus the new bonus deduction (if their income falls below the limit). Keep in mind that the regular standard deduction and the additional standard deduction are available only to people who don’t itemize, while the new bonus deduction is available even to itemizers.

Here’s an example of how these tax breaks can work in tandem.

Example of tax perks available to taxpayers who are 65 or older

A 65-year-old single filer with income of $50,000 in 2025 who is claiming the standard deduction (rather than itemizing):

• $15,750 standard deduction
• $2,000 additional standard deduction for those 65 and older
• $6,000 new bonus deduction for those 65 and older

That adds up to $23,750 in total deductions. Subtracting that total deduction from $50,000, you end up with $26,250 in taxable income.

The value of the tax deduction is reduced by 6 percent of the modified adjusted gross income, or MAGI, above the income limit. As noted, the limits are $75,000 for single filers and $150,000 for married filing jointly couples. That means, for example, that a single 65-year-old filer who has MAGI of $80,000 would see the value of the tax break drop by $300, to $5,700. That’s the difference between $75,000 and $80,000, multiplied by .06.

Tax-free Social Security benefits? Not so fast

The new bonus deduction is in lieu of tax-free Social Security benefits for retirees, an idea touted by Trump on the campaign trail. That’s because changing how Social Security benefits are taxed would be complex — and costly, reducing government revenues by as much as $1.5 trillion over 10 years, according to an estimate by the nonpartisan Tax Policy Center. 

Adding an extra deduction is simpler and cheaper.

Plus, this new tax break will help out lower-income taxpayers more than ending taxes on Social Security benefits would have, says Mark Luscombe, a CPA and principal analyst for Wolters Kluwer Tax & Accounting in Chicago. 

For one, Social Security beneficiaries with lower incomes generally don’t owe taxes on their benefits — that’s a fate that hits higher-income beneficiaries. Plus, the new tax break has income limits that skew the benefit toward lower-income taxpayers.

The tax perk’s income phase-out will “focus it on lower- to middle-income taxpayers,” Luscombe says.

Also unusual for a deduction like this? This one is available to people whether or not they claim the standard deduction or itemize their deductions.

That said, “very few people at these income levels are itemizing,” Luscombe says. “Only about 10 percent of taxpayers currently itemize.”