A Key 2025 Tax Season Detail For Seniors
Staying informed during tax season and coordinating with your tax advisor or CPA can help ensure important opportunities are not overlooked and that your financial plan remains aligned with your goals.
One Small Form Could Make A Meaningful Difference
If you are age 65 or over this is the key takeaway: A new tax deduction may be available for the 2025 tax filing season. However, it is not automatic and requires filing a new form, Schedule 1-A. Without this form, the deduction can be easily missed.
We previously highlighted this important update in our, What The New Tax Law Means For Social Security Benefits communication. As tax season is now underway and returns are being prepared, we want to reinforce the key point. Some seniors may qualify for a valuable new tax deduction if it is properly claimed.
An Overview Of The Tax Update
Beginning with 2025 tax returns, a new temporary “enhanced senior deduction” allows eligible individuals to deduct up to $6,000 of income, even if they do not itemize deductions.
Key highlights:
- Available for tax years 2025 through 2028
- Applies to taxpayers age 65 and over
- Available in addition to the existing extra standard deduction for seniors
- Can reduce taxable income and potentially increase refunds
For perspective, a $6,000 deduction could translate into hundreds or even thousands of dollars in tax savings, depending on your tax bracket.
The Catch
This deduction is easy to miss. Unlike many familiar tax benefits, this new deduction:
- Is not automatic
- Does not appear directly on Form 1040 or 1040-SR
- Requires filing a new, additional form: Schedule 1-A
Since many retirees file relatively simple returns, there is a real risk this deduction could be overlooked if no one is watching for it.
Who May Qualify
You may be eligible if:
- You are age 65 or over
- You file single or married filing jointly
- Your income falls below certain thresholds
Important considerations:
- The deduction phases out at higher income levels, beginning at $75,000 for single filers and $150,000 for joint filers (based on modified adjusted gross income).
- Married couples must file jointly to claim it
- Filing separately disqualifies the deduction
You do not need to be receiving Social Security benefits to qualify.
A Common Point of Confusion
Social Security rules have not changed. The tax law does not fully eliminate federal income taxes on Social Security benefits. Instead, the legislation provides a new “senior deduction” (sometimes informally called a “senior bonus”) for taxpayers age 65 and over.
If you have specific questions or would like to discuss your own investment strategy or financial planning needs, we welcome you to contact us to set-up a time to discuss further.
Disclosures:
Covenant Wealth Strategies, LLC, and LPL Financial are not endorsed by or affiliated with the United States Social Security Administration or any government agency.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.