President Trump's "Big Beautiful Bill" didn't do away with taxes on Social Security, but it does give seniors 65 and older an additional $6,000 bonus tax deduction in tax years 2025 through 2028.
Tax experts say now is the time for seniors who qualify for this deduction to take advantage of strategies that can help trim taxes on Roth IRA conversions, required minimum distributions (RMDs), capital gains, and the sale of a home.
Here are six ways to benefit from the "senior bonus" deduction.
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1. Roth IRA conversions
Arguably the biggest benefit of the $6,000 senior deduction is that it makes Roth IRA conversions a tad more tax-friendly for folks aged 65 and older.
Roth IRA conversations are taxable events, as the dollar amount converted from a traditional IRA to a Roth IRA is added to income in the year of the conversion. So, if you convert $25,000 to a Roth IRA in 2025, that amount will be added to your income. "Seniors can use the $6,000 deduction to offset this added income," says Alison Flores, manager with the The Tax Institute at H&R Block.
Remember, this new deduction is only available to those 65 and older by the end of the current tax year who have a Social Security card and who use any tax filing status other than married filing separately, according to H&R Block.
And like many tax provisions in the Big Beautiful Bill, the deduction phases out above a certain income level: Modified adjusted gross income (MAGI or AGI) of $75,000 for singles and $150,000 for those married, filing jointly. It phases out completely for MAGI above $175,000 and $250,000, respectively.
Here's how the extra deduction can reduce the tax hit on a Roth conversion for a married couple. The $12,000 deduction per couple over age 65 filing jointly is on top of the $33,500 standard deduction. So, a married 65-plus couple can deduct up to $45,500 in 2025.
Flores lays out a simple example to illustrate the tax savings. Let's say a married couple aged 65-plus has $20,000 in Social Security income, $5,500 in interest income, and converts $20,000 from a traditional IRA to a Roth IRA.
The math works like this: The total income of $45,500 from Social Security, interest income and the Roth conversion is offset by the $45,500 deduction they get from the standard deduction plus the new $12,000 per couple 65-and-older deduction. "Because their deductions equal their income, they owe no federal tax on the Roth conversion," Flores says.
Taking advantage of the larger deduction allows seniors to convert pre-tax IRA funds into a Roth IRA at a lower tax cost.
The higher deduction can also help seniors convert more money into a Roth IRA without bumping up to a higher tax bracket, says Steven Novack, a senior financial adviser at Altfest Personal Wealth Management.
Let's say a 65-plus couple is in the 12% tax bracket (taxable income of $23,850 to $96,950) and has $70,000 in income and takes a full deduction of $45,500 ($33,500 standard deduction and $12,000 extra deduction). Their taxable income falls to $24,500.
If the goal is to maximize the 12% tax bracket, the couple — with the help from the extra $12,000 deduction — can convert $72,450 from a traditional IRA to a Roth IRA and still stay within the 12% bracket.
"If you convert more, after that you're going to be in the 22% bracket," Novack says.
Since this $6,000 per person deduction expires four years from now, Flores recommends spreading IRA conversions over the four-year window (2025-2028), so seniors who qualify for the extra deduction can maximize the extra deduction each year and manage their tax exposure more effectively.
Trimming your tax hit on a Roth IRA conversion isn't the only way to save on taxes using the extra $6,000 deduction. Here are some other ways to cash in.
2. Reduce taxes on required minimum distributions
The new senior deduction does not lower the dollar amount of your IRS-imposed required minimum distributions (RMDs). What it does do, however, is lower the taxable income of a married couple over age 65 by $12,000 in a given tax year, which can slash the tax owed on your RMDs and other income.
3. Increase tax savings for seniors who itemize
Normally, taxpayers who itemize on their tax return can't claim the standard deduction or the additional deduction for seniors. However, the new $6,000 deduction for those 65 or older is available even if they itemize on their taxes. This can increase tax savings for seniors who have significant deductions for medical expenses, charitable contributions, or other itemized deductions, such as federal deductions for state and local income, and property taxes and interest paid on real estate, says Novack.
Novack says 65-plus tax filers who live in high-tax states with expensive real estate, such as California, New York and New Jersey, can boost their tax deduction even beyond the standard deduction and new 65-plus deduction by taking advantage of the so-called SALT deduction, which Trump's tax-and-spending bill expanded to $40,000, up from $10,000, through the end of 2029. "You can really take advantage of those two things to reduce your income and keep your income below the tax thresholds and tax brackets," Novack says.
4. Save taxes on capital gains
Capital gains from the sale of investments, such as stocks and mutual funds, are taxed based on your taxable income, says Flores.
The newest IRS perk allows capital gains to be taxed at 0% for single filers with taxable income of $48,350 or less and joint filers with income less than $96,700.
"Seniors can use the $6,000 deduction to reduce their taxable income and stay within the 0% capital gains bracket," says Flores. "This is especially useful for retirees who want to sell appreciated assets without incurring a tax bill."
A smart strategy over the next few years is to time asset sales in years when other income is low so you maximize the extra deduction more fully, says Flores.
5. Save on taxes when downsizing
Many adults 65 or older own homes that have appreciated massively over time. And while the IRS allows single filers to exclude up to $250,000 of capital gains on a home sale and joint filers $500,000, many seniors have enjoyed home appreciation rates that may produce capital gains beyond the IRS tax-free threshold.
This is where the new $6,000 senior tax deduction (or $12,000 for couples) can play a valuable role, says Flores.
"Seniors who choose to sell their home during the 2025-2028 window can use it to offset the taxable portion of their capital gain on their home sale," she explains. "In short, timing the sale of a long-held home to coincide with the availability of the senior deduction can be a smart strategy to minimize the tax impact of downsizing. It's a way to turn a life transition into a tax-efficient opportunity."
Social Security and Medicare
Flores also clarifies a point that has caused some confusion. The $6,000 senior tax deduction is considered a so-called "below-the-line deduction", meaning it reduces taxable income but does not reduce AGI. That means it won't impact the calculation of provisional income and, she says, "does not influence AGI-based thresholds used for Social Security taxation or Medicare premium adjustments."
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