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Tax filing begins: 8 overlooked breaks retirees 60+ should check for

Michael KurkoJanuary 26, 2026 at 7:15 PM

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Over 60? Don’t miss these 8 IRS breaks that can cut your tax bill (Maskot via Getty Images)

It’s reasonable to expect that your taxes should ease up a bit once you retire. But between Social Security taxes, retirement withdrawals and investment income, many older Americans still face a surprisingly high IRS bill. In fact, nearly 17 million Americans ages 65 and older are economically insecure, living at or below 200% of the federal poverty level, making every dollar saved on taxes a win.

The good news? With tax season now open, there's still time to claim at least five deductions and credits available specifically for retirees — including a new $6,000 senior deduction that debuted in 2025. Many of these breaks go unclaimed every year, simply because people don’t know they exist or assume they don’t qualify.

Here are the tax breaks retirees most often overlook, and how each one can help stretch your fixed income.

⭐ Must read: 13 big tax changes in 2026 that can boost (or shrink) your refund

1. New $6,000 OBBB senior deduction

If you’re 65 or older, you can cut your taxable income by an additional $6,000 this year — or $12,000 for married couples where both spouses qualify.

The new deduction under the One Big Beautiful Bill (OBBB) is stacked on top of both the regular standard deduction and the additional age-based standard deduction seniors already receive.

Unlike medical expense deductions, there’s no need to track healthcare receipts or meet out-of-pocket minimums. It’s a flat $6,000 bonus — though it does start phasing out for higher earners starting at $75,000 for single filers and $150,000 for those married and filing jointly.

The deduction is available through 2028. Because it’s new and many taxpayers are still catching up on the details, it’s worth asking your financial advisor or tax preparer whether you qualify.

🔍 Read more: 7 big changes to Social Security in 2026 you

2. Boosted standard deduction for ages 65 and up

This one catches many retirees off guard: Once you turn 65, you automatically qualify for a larger standard deduction. Yet plenty of older taxpayers miss it, assuming the standard deduction is the same for everyone regardless of age.

For the 2025 tax year, the extra standard deduction is $2,000 if you’re filing as single or head of household. Married filers get $1,600 per qualifying spouse — so if you’re both 65 or older, that’s an additional $3,200 on top of the base standard deduction.

This age-based boost lowers taxable income automatically, before any other deductions or credits come into play. It’s particularly valuable if you no longer itemize expenses like mortgage interest or large medical bills.

Most tax software applies it automatically when you enter your birthdate, though it’s worth double-checking your return.

🔍 Read more: Best tax software for 2025: 5 low-cost and premium ways to maximize your return

3. The Social Security tax exemption rule

Here’s a surprise: Historically, about 40% of people receiving Social Security pay federal income tax on their benefits, according to the IRS — but it also means that 60% don’t. Whether you fall into that taxable group depends on your “combined income,” which includes your adjusted gross income, any non-taxable income you earn plus half of your Social Security benefits.

The thresholds are straightforward: If your combined income is below $25,000 as a single filer or $32,000 married filing jointly, your Social Security benefits are exempt from taxes. Above those levels, and the percentage of your benefits taxed varies from 50% to 85%. The OBBB's new $6,000 senior deduction helps more retirees stay below these thresholds.

What confuses many retirees is that traditional IRA and 401(k) withdrawals count toward “combined income,” but Roth IRA withdrawals don’t. That means shifting your distribution strategy or adjusting part-time work income can keep you below the threshold and shield your Social Security from taxation.

🔍 Read more: The 5-step withdrawal plan that can stretch your retirement savings

4. Underused medical expense deductions

Medical costs often become one of the largest line items in retirement budgets. Yet many retirees dismiss medical expense deductions.

The assumption is the 7.5% adjusted gross income (AGI) threshold is too high to reach. But once you factor Medicare premiums alone — often $2,000 to $3,000 per person a year — many retirees are closer to that threshold than they think.

Here’s the math: You can deduct medical expenses that exceed 7.5% of your AGI. On an AGI of $50,000, that’s $3,750. Medicare Part B and D premiums count. So do Medigap premiums, prescriptions, dental and vision care, medical equipment and even certain home modifications like wheelchair ramps and walk-in tubs.

You must itemize to claim this deduction. But in high-cost medical years, it’s worth the paperwork.

✅ Pro tip: Eligible long-term care premiums

Long-term care insurance premiums are also deductible, with limits based on age. For 2025, if you're age 70 or older, you can deduct up to $6,020 in itemized long-term care premiums for each person.

🔍 Read more: What hospitals won't tell you: 7 steps to lower your medical bills

5. Credit for older taxpayers with disabilities

This may be the IRS’s best-kept secret. The Credit for the Elderly or Disabled can reduce your tax bill by $3,750 to $7,500, depending on filing status — yet it goes unclaimed by thousands of eligible retirees each year, simply because they’ve never heard of it.

You must be 65 or older by the end of the tax year, or younger than 65 but retired on permanent disability with taxable disability income.

The catch is the income threshold, which is low. For single filers, your AGI must be under $17,500 and your non-taxable Social Security and pensions under $5,000, with higher limits for married couples filing jointly.

But if you’re in a year with lower income — say, you retired mid-year or had unusually high medical expenses — it’s worth running the numbers with your financial advisor or tax preparer.

🔍 Read more: 9 states that still tax retirees' Social Security (and one that's quitting in 2026)

6. Tax-free giving with Qualified Charitable Distributions

If you donate to charity regularly, there’s a chance you’re doing it the expensive way. Most retirees write a check, itemize the deduction and call it a day. But if you’re 70 1/2 or older with a traditional IRA, there’s a far more tax-efficient strategy: the Qualified Charitable Distribution (QCD).

You can donate up to $108,000 a year in 2025 directly from your IRA to a qualified charity, with married couples able to donate up to $216,000 combined. The contribution counts toward your required minimum distribution (RMD) but it doesn’t show up as taxable income.

The QCD strategy is particularly valuable for retirees who take the standard deduction. You get the tax benefit of charitable giving without needing to itemize. Even better, keeping that IRA money out of your adjusted gross income can keep you from crossing into a higher bracket or triggering taxes on Social Security benefits.

To take advantage of QCDs, ask your IRA custodian to send a check directly from your IRA to the charity. You’ll receive a 1099-R showing the distribution, which you’ll report as a QCD on your tax return.

Even small annual QCDs can result in meaningful tax savings.

🔍 Read more: Private jets, pools and pups: 7 wild tax deductions the IRS actually allows

7. IRA contributions after retirement

Just because you’re retired doesn't mean you stop earning — or saving. If you or your spouse works part-time, consults or runs even a small business in retirement, you can still contribute to a traditional or Roth IRA.

Investment income, Social Security benefits and pension payments don’t count. But even modest earnings can cover a full contribution.

Here’s a valuable strategy many couples miss: If one spouse earns income and the other doesn’t, the working spouse can contribute to a spousal IRA on behalf of the non-working spouse as well. For 2025, that's up to $7,000 a person — or $8,000, if you're 50 or older. Depending on whether you use a traditional or Roth IRAs, you’ll either reduce your current tax bill or build tax-free growth for the future.

Many retirees assume these accounts close off entirely once they leave full-time work. In reality, as long as you have some earned income, you can keep building tax-advantaged savings well into your 60s, 70s and beyond.

🔍 Read more: 4 ways to earn more in retirement — without losing your Social Security

8. Annual gift tax exclusions

Most retirees will never owe federal estate tax — the exemption is a generous $13.99 million. That’s per person.

Still, one opportunity many overlook is the annual gift tax exclusion. In 2025, you can give up to $19,000 per recipient without triggering gift tax or dipping into your lifetime exemption. That means if you have three children, you could gift each of them $19,000 for a total of $57,000. Married couples can combine their exclusions to give $38,000 per person — or $114,000 to those same three kids.

Using the gift tax exclusions is a simple way to help out children or grandchildren now while gradually reducing the size of your taxable estate later. Many retirees hesitate to give because they assume the rules are complicated. In reality, most routine gifts fall well within the annual limit.

🔍 Read more: 5 red flags to watch out for before choosing a financial advisor

Bottom line: Smart tax moves help your retirement income go further

Retirement doesn’t have to come with unexpectedly high taxes. With the right mix of deductions and credits, you can significantly reduce what you owe — but only if you know how to claim them.

A quick annual check-in with a trusted financial advisor or tax professional can help ensure you're not overlooking valuable tax breaks you’re entitled to or leaving money on the table. With a little planning, more of your hard-earned retirement income can stay exactly where it belongs: in your wallet.

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About the writer

Michael Kurko is a finance writer and editor who covers investing, real estate, personal budgeting and financial literacy. His expertise has been featured in FinanceBuzz, The Balance, Investopedia, U.S. News & World Report and Forbes Advisor, among other top financial publications. In addition to his work in finance, Michael is also a freelance book editor and fiction writer. He strives to make complex money topics clear and approachable so readers can make informed decisions and build lasting financial confidence.

Article edited by Kelly Suzan Waggoner

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