For couples 65 and older, the next four years may provide an incredible window of opportunity to save on taxes, as your standard deduction is temporarily bumped up to—wait for it—$46,700!
One of the provisions in the One Big Beautiful Bill Act (OBBBA) provides individuals age 65 and older with an additional federal tax deduction of $6,000. This amount is in addition to the current extra standard deduction for seniors under existing law. The new deduction applies to both itemizing and non-itemizing taxpayers. It begins to phase out for those with a modified adjusted gross income (MAGI) over $75,000 for single filers and $150,000 for joint filers, and it phases out completely when MAGI exceeds $175,000 for single filers or $250,000 for joint filers.
Let’s do the math: The standard deduction for the 2025 tax year is $15,750 for single filers and $31,500 for married couples filing jointly. Non-itemizing taxpayers aged 65 and older receive an additional $1,600 for each spouse—a long-standing benefit designed to help offset the financial burdens that often come with age, such as increased medical expenses and living on a fixed income. The OBBBA’s temporary $6,000 deduction per senior, available from 2025 through 2028, brings the total standard deduction to $23,350 for single filers and $46,700 for married filing jointly.
With such a high standard deduction, it’s difficult for the average taxpayer to clear that hurdle to itemize. However, this also presents valuable opportunities to align tax planning with investment strategy.
Let’s start with Roth IRA conversions, which are taxable events. The larger deduction allows you to convert pre-tax IRA funds into a Roth IRA at a lower tax cost. When taking money from a traditional IRA, it’s considered income. The after-tax amount is then placed into a Roth IRA, where it can continue to grow tax-free for your lifetime and even be passed to your heirs tax-free. You’ll want to work with your financial adviser and CPA to determine how much you can convert while staying within your desired tax bracket.
This temporary tax window can also help offset capital gains. If you have highly appreciated assets, you may be able to realize some of those gains while still paying roughly the same total amount in taxes, since the larger deduction shields more income. These gains could come from selling appreciated stock positions or even the sale of your home. If downsizing is in your near future, this tax window could help reduce the taxable portion of your home-sale gain.
If you’re charitably inclined, you could direct your additional tax savings into a donor-advised fund over the next several years. Assets in a donor-advised fund don’t have to be distributed to charities annually, so your contributions can be invested and potentially grow before you distribute the funds.
However you plan to accelerate income during these years to take advantage of the bonus deduction, be mindful of state taxes, if applicable. The bonus deduction applies only to federal income tax, so when calculating your overall tax liability, consider how much more you may owe in state income tax.
If you have questions on how this bonus deduction can work in your situation, the experts at Henssler Financial will be glad to help:
Listen to the October 18, 2025 “Henssler Money Talks” episode.
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