The recently passed One Big Beautiful Bill Act (OBBBA) addresses some tax law uncertainty and creates some benefits impacting your 2025 tax return. One of these benefits is a new $6,000 deduction for seniors. Here is what you need to know.

Personal exemptions are gone

First and foremost, the law permanently eliminates personal exemptions. Without the change, exemptions were scheduled to be reintroduced in 2026. However, the law also introduces a new senior deduction of $6,000 per individual, subject to these requirements.

New benefits for seniors

• You must be 65 years or older during the tax year
• The $6,000 benefit is only available from 2025 through 2028
• It is per taxpayer, but if married, you must file a joint tax return
• You must have a valid Social Security Number
  The benefit phases out when your modified adjusted gross income exceeds $75,000 single or $150,000 joint (assuming both are 65 or older during the tax year)
• The $6,000 is reduced by 6% of the excess over this amount

This makes the phaseout ranges:

Single: $75,000 – $175,000

Joint filers: $150,000 – $350,000

For example, Mickey and Minnie Mouse, both 96 years old, file a joint tax return and have a modified adjusted gross income of $200,000. Their new senior exemption will be $9,000. It reduced by $3,000 (6% times ($200,000 – $150,000)).

Tips you can use

• Get the word out. Everyone knows someone who will receive this benefit. So inform anyone who may be impacted by this new deduction.
• Planning occurs now. If you are over 65 and still working, be aware of this new deduction and its phase-out provisions.
  • Work fewer hours if you think you will be approaching the phaseout
  • Understand what the IRS means by modified adjusted gross income
  • Consider adjusting your withholdings if appropriate for your situation
• Social Security is taxable. Remember, your Social Security benefits are still subject to federal income tax. Earlier press reports suggesting that excluding this income from tax is not the law are incorrect.
• Other standard deductions still apply. This $6,000 senior deduction is in addition to your standard deduction, including the typical age-related deductions and benefits. It does not replace any of them.

Numerous details in OBBBA impact you or someone you know. With a quick review, you can see if you will need some assistance. When this happens, contact our RRBB advisors for help.