Filing taxes as a retiree or a senior is a whole new game. In your earlier years, you may have submitted your W-2, claimed the standard deduction, taken a few child tax credits and cashed your refund. But if you’re approaching retirement, already retired, or over 50, there are a few things you should know about the 2025 tax year.
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This year, the IRS is offering a tax deduction of up to $12,000 for lower-income and middle-class seniors over 65, thanks to the One Big Beautiful Bill. Some seniors who were at least 65 years old at the end of 2025 and have a valid Social Security number issued before the due date of the tax return (including extensions) can claim an additional deduction of $6,000 on their tax return. Married couples, filing jointly, who both fulfill the requirements, can claim a $12,000 deduction if they meet income requirements. This deduction is available for couples with a modified adjusted gross income less than $75,000 ($150,000 for married couples filing jointly). After that, the deduction phases out incrementally until it’s completely gone for individual filers with a MAGI of $175,000 or joint filers with a MAGI of $250,000.
“This change doesn’t affect how Social Security benefits are taxed, and you don’t need to be collecting Social Security to qualify,” said Eric Bronnenkant, Head of Tax, Edelman Financial Engines. “On the other hand, taxpayers under age 65 aren’t eligible for the deduction even if they are already receiving Social Security.”
The deduction is available whether you itemize or take the standard deduction. File Schedule 1-A on Form 1040 to claim the deduction.
Retirement Account Contribution limits
As you’re filing your 2025 tax returns, it’s a good idea to look at your plans for 2026. It’s not too late to make adjustments that will benefit you come tax time next year. The contribution limit for 401(k), 403(b), governmental 457, and the government’s Thrift Savings Plan increased to $24,500 for 2026, up from $23,500 in 2025.
The catch-up contribution limit for employees age 50+ has increased to $8,000. Under the Secure 2.0 Act, workers who are aged 60 through 63 have a catch-up contribution limit of $11,250, making it easier to save more in these years approaching retirement. Contribution limits for IRAs increased to $7,500 in 2026, with a catch-up contribution limit of $1,100, a small cost-of-living adjustment from 2025.
If you earn more than $150,000, you’ll see some changes affecting catch-up contributions in 2026. “Starting in 2026, anyone with more than $150,000 in 2025 FICA wages will be required to put all catch-up contributions into a Roth account,” Bronnenkant said.
RMD Rules
The Secure 2.0 act also adjusted the age for required minimum distributions (RMDs) for retirement accounts, which can benefit older adults who are still working or have other sources of income beyond tax-deferred retirement accounts like a 401(k) or traditional IRA. If you were born before between January 1, 1951 and December 31, 1959, you have to begin taking RMDs by age 73. Anyone born in 1960 or later doesn’t have to start withdrawing RMDs until age 75. You may be able to delay RMDs until April 1 of the year after you turn 75.
Under Secure 2.0, Roth 401(k)s and Roth IRAs are both exempt from RMDs while the original account holder is alive. If you don’t meet your RMDs, you may have to pay a 25% excise tax on the amount not distributed, according to the IRS.
RMDs may significantly increase your taxable income, especially if you’re still working. Careful tax planning can help minimize the effects. In 2026, you can donate up to $111,000 to a qualified charitable distribution (QCD) account directly from an IRA. This counts toward your RMD to avoid penalties. There’s another benefit, too. “Since the donation is already tax-free, it isn’t deductible, but it’s also excluded from adjusted gross income, which helps keep Medicare/IRMAA premiums down,” Bronnenkant said.
IRMAA thresholds
Upper-middle and high-net-worth seniors want to consider IRMAA thresholds (income-related monthly adjustment amounts), which can affect Social Security benefits and Medicare premiums. If your 2024 MAGI is more than $109,000 for a single filer or $218,000 for married couples filing jointly, you’ll be subject to IRMAA rules in 2026. IRMAA costs apply to Medicare Parts B, C, and D, not for Part A, which is hospital coverage and typically carries no premium costs. While these added costs won’t be paid at tax time, they can affect your 2026 household budget.
It’s always wise to speak to a financial professional regarding tax and retirement planning, especially since rules change from year to year.
