Big Tax Deduction Increase Proposed for Those Over Age 65

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Retirement is meant to be a time of ease after years of hard work, but for many older adults in the United States, taxes and rising costs make it harder to get by.

According to the U.S. Bureau of Labor Statistics, so far this year, food prices have increased 2.5%, rent and housing costs have climbed 4.4%, and health care services have increased by nearly 3%.

As if that weren’t enough, almost half of all Social Security recipients owe federal income tax on their Social Security benefits. That’s a sharp rise from less than 10% back in the 1980s, per IRS data.

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The culprit? Income thresholds for taxing Social Security income haven’t changed in more than forty years, even while expenses have soared.

And with so many retirees feeling the pinch, Congress is facing mounting calls to provide meaningful tax relief.

Enter the Bonus Tax Relief for America’s Seniors Act, newly proposed bipartisan legislation. If approved, the bill would more than double the additional standard deduction for those over age 65.

Its sponsors and advocates, like the AARP, say the legislation could go a long way to reducing the tax burden for millions of older adults. Plus, Republicans on the U.S. House Ways and Means Committee just unveiled a legislative proposal that would, if passed, also increase the extra standard deduction.

Curious? Here’s more of what you need to know.

New bill could more than double tax deductions for people over 65

The Bonus Tax Relief for America’s Seniors Act was recently introduced by a bipartisan group of lawmakers: Reps. Nicole Malliotakis (R-N.Y.), Mike Carey (R-Ohio), and Jimmy Panetta (D-Calif.).

As mentioned, the legislation would more than double the existing additional standard deduction for taxpayers age 65 and older.

Currently, the extra standard deduction for people age 65 or older stacks on top of the regular standard deduction, helping to lower taxable income.

The amount of the extra standard deduction can vary based on factors like filing status and whether you or your spouse is 65 or older. Whether you or your spouse is blind is another factor.

For instance, for 2025, the additional standard deduction is $2,000 if you are single or file as head of household.
If you're married, filing jointly or separately, the extra standard deduction amount is $1,600 per qualifying individual, so $3,200 for those filing jointly.

The bill proposes bonus deduction amounts of more than double the current numbers.

So, for single filers, the deduction would increase under the bill to $5,000.
The deduction would rise to $10,000 for married couples filing jointly.
The extra standard deduction would still be adjusted annually for inflation.

The bill’s sponsors say such an increase would help offset or effectively eliminate federal income taxes on Social Security benefits for many retirees, especially those with incomes above the current tax thresholds ($25,000 for individuals, $32,000 for couples).

In a statement, Nancy LeaMond, AARP’s executive vice president and chief advocacy and engagement officer, wrote that the bill “reflects a bipartisan understanding that our tax code should better support those who have worked hard, earned benefits and contributed to our economy throughout their lives.”

LeaMond went on to describe the higher bonus tax deduction as a “targeted, commonsense adjustment that recognizes the financial pressures facing older Americans.”

Given public sentiment, targeted tax relief might be welcome. A recent study conducted by Allianz Life finds that 63% of Americans now worry more about running out of money than dying, and inflation is the top concern for retirees, outpacing worries about health care costs.

House and Senate GOP propose bonus to the extra standard deduction

The latest House GOP $4 trillion tax plan to implement Trump's "one big beautiful bill" also includes a significant, temporary boost to the standard deduction for Americans 65 and older.

Under the proposal, older adults who take the standard deduction would receive an extra $4,000, nearly doubling the current additional deduction for that age group.

If approved (the bill, now in the U.S. Senate, has to clear several legislative hurdles), the increase would be in effect through 2028 and subject to certain income limits. (Adjusted gross income, AGI, of no more than $75,000 for single filers/$150,000 for married filing jointly.)

Update: The Senate just proposed a $6,000 “bonus deduction” for those over 65 in their version of President Trump’s signature tax and spending package, dubbed the One Big Beautiful Bill Act.

The move sets the U.S. Senate’s proposal apart from Republicans in the U.S. House of Representatives, who approved a $4,000 bonus deduction.

Supporters say the proposed change is meant to help older adults manage rising expenses, especially those living on fixed incomes.

In a press conference, Rep. Malliotakis said the idea for the bonus tax relief bill came to her in part because her father asked her why retirees have to pay taxes on Social Security benefits.

For many years, up to 85% of a person’s Social Security benefits can be subject to tax, depending on their income. To determine how much is taxable, the IRS uses a tiered system based on “combined income.” (Combined income is your adjusted gross income plus nontaxable interest and half of your Social Security benefits from the year.)

The system can seem counterintuitive, given that many recipients worked hard and paid taxes for years before taking Social Security.

"Too many seniors are being forced to stretch their retirement savings further than ever before. After a lifetime of hard work and paying taxes, they deserve to keep more of their Social Security and retirement income without Uncle Sam reaching into their pockets again,” Malliotakis stated in a release.

According to Malliotakis and the bill’s other sponsors, a married couple filing jointly with $85,000 in income could reduce their federal tax bill by about $2,100 a year.

You likely heard that President Trump pledged during his presidential campaign last year to eliminate taxes on Social Security. But, as Kiplinger has reported, some policymakers and economists warn that doing so could do more harm than good.

Also, it's worth noting that changes to Social Security cannot be made through the budget reconciliation process. (The Republican-led Congress plans to use that process to eventually pass Trump’s “one big beautiful bill” covering tax, climate, and border reform.)

Note: Under the Senate’s “Byrd rule,” adjustments to Social Security benefits, eligibility, or the program’s structure must go through the standard legislative process, which typically requires 60 votes in the U.S. Senate.

Meanwhile, in a statement, Rep. Panetta referenced bipartisanship regarding the bonus tax deduction proposal.

"By increasing the additional deduction for older Americans, we would help ensure that they can retire with the financial security and dignity they deserve. Through this bipartisan legislation, we can take a meaningful step toward easing that burden by allowing seniors to keep more of their hard-earned money."

Additionally, several proposals from lawmakers on both sides of the aisle to address concerns regarding taxes on Social Security are floating around Congress.

For more information, see Will Retirees Stop Paying Taxes on Social Security Next Year?

This article has been updated to include information about the Senate GOP's proposal to raise the extra standard deduction.

Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.