Temporary Tax Breaks for Seniors: How to Leverage Them Before They're Gone

Stacking Your Tax Benefits 

 The new bonus deduction stacks on top of other tax breaks already available to seniors. For 2025, a single filer age 65 or older can combine the standard deduction of $15,750, the existing additional standard deduction of $2,000, and the new $6,000 bonus for a total of $23,750 in deductions. 

 Married couples where both spouses are 65 or older could deduct up to $46,700 when combining all three benefits. This substantial reduction in taxable income can dramatically lower your tax burden or even eliminateit entirely for many seniors. 

 Strategic Considerations Before 2028 

 To make the most of these temporary benefits, consider these planning strategies: 

Timing Income Wisely: Be mindful of when you take IRA distributions, sell investments, or realize capital gains. Large withdrawals could push you over the income thresholds, reducing or eliminating your bonus deduction. Consider spreading distributions across multiple years to stay within the limits. 

Roth Conversion Planning: If you've been considering Roth conversions, the next few years present a unique opportunity. However, test conversions carefully against the various phaseouts. Even a modest conversion could impact your senior deduction, SALT deduction eligibility, and Medicare IRMAA premiums. 

Document Everything: Keep meticulous records of your income sources and deductible expenses. The IRS requires you to include Social Security numbers for qualifying individuals on your return, and married couples must file jointly to claim the deduction. 

Review Your Withholding: With these enhanced deductions, you may be over-withholding taxes from pension payments or retirement account distributions. Adjusting your withholding could improve your monthly cash flow immediately. 

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The Bigger Picture 

While the new deduction provides significant relief, it's part of broader tax legislation affecting retirees. The SALT deduction cap has also increased temporarily from $10,000 to $40,000 for most taxpayers earning below $500,000, effective through 2029. This change particularly benefits seniors in high-tax states who itemize deductions. 

Understanding how these provisions interact with your overall financial picture requires careful analysis, and it may prove beneficial to work with a financial advisor to maximize these potential benefits. Our wealth management advisors at WHZ can help you make these nuanced decisions about when to claim Social Security, how much to withdraw from retirement accounts, and whether to itemize or take the standard deduction.  

Don't Wait to Act 

The window to leverage these benefits is limited. Meeting with a qualified financial advisor or tax professional now allows you to develop a comprehensive strategy for the remaining years these deductions are available. Waiting until 2027 or 2028 means missing valuable opportunities to optimize your tax situation. 

These temporary tax breaks represent the largest tax relief for seniors in recent history. For many older Americans, proper planning around these provisions could mean the difference between paying substantial taxes and owing little to nothing on their retirement income. 

Ready to take control of your tax planning and overall financial strategy? At WHZ Strategic Wealth Advisors, we help seniors navigate complex tax situations and develop strategies that maximize benefits while minimizing liabilities. Our "Plan Well. Invest Well. Live Well.™" process ensures you're taking full advantage of available opportunities before they disappear. 

Don't let these valuable tax breaks slip away. Contact us for a complimentary discovery session at whzwealth.com or call us at (860) 928-2341 to discuss how to optimize your tax strategy before time runs out. 

Authored by WHZ Associate Vice President, Wealth Advisor Jonathan Mathews. AI may have been used in the research and initial drafting of this piece. Investments are subject to risk, including the loss of principal. Past performance is no guarantee of future results. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084, 860.928.2341. http://www.whzwealth.com. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. WHZ Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.