The standard deduction is one of the most powerful tools for lowering taxable income — and it just became even more important. Under the new One Big Beautiful Act (OBBBA), higher standard deduction amounts are now permanent, and seniors may qualify for an additional temporary deduction through 2028.
These updates could significantly affect tax planning decisions for individuals, retirees, and families. Here’s a clear, easy-to-understand breakdown of what changed and how it may impact you.
Permanent Higher Standard Deduction
The expanded standard deduction originally introduced under the Tax Cuts and Jobs Act was set to expire after 2025. Now, under the One Big Beautiful Act (OBBBA), those higher amounts are permanent.
Why This Matters
A permanent extension means:
- Greater long-term tax certainty
- Easier multi-year financial planning
- Fewer taxpayers needing to itemize deductions
For example:
- Married filing jointly (under age 65 in 2025): Up to $31,500 standard deduction
- Single filers: Higher adjusted limits (varies by year)
- Annual inflation adjustments will still apply
This change simplifies filing for millions of households.
Temporary Additional Deduction for Seniors (2025–2028)
Beyond the regular age-65+ add-on, seniors may qualify for an extra temporary deduction of up to $6,000 per eligible individual from 2025 through 2028.
How It Works
- $6,000 per eligible taxpayer age 65+
- Married couples where both are 65+ could receive up to $12,000 extra
- Applies in addition to the regular standard deduction
- Available only from 2025 to 2028
However, income limits apply.
Income Phase-Out Rules for Seniors
The senior deduction phases out based on Modified Adjusted Gross Income (MAGI):
- Single filers: Phase-out begins at $75,000
- Married filing jointly: Phase-out begins at $150,000
- Deduction reduced by 6% of income above the threshold
Example
If a married couple has $175,000 MAGI:
- $25,000 above the threshold
- 6% of $25,000 = $1,500 reduction
- $6,000 senior deduction becomes $4,500
Understanding these limits is crucial for retirees managing withdrawals from IRAs, pensions, or investment accounts.
Will Fewer People Itemize?
Yes — most likely.
With the permanent higher standard deduction:
- Many homeowners may no longer benefit from itemizing
- Medical expenses must exceed 7.5% of AGI to qualify
- Charitable deductions have income limits
- State and local tax (SALT) deductions are capped (though temporarily increased in some cases)
When Itemizing Still Makes Sense
You might consider itemizing if:
- You have unusually high medical expenses
- You live in a high-tax state and hit SALT limits
- You made substantial charitable contributions
For most households, however, the standard deduction will remain the simpler and more beneficial option.
Planning Tips for 2025–2028
Because the senior deduction is temporary, timing matters.
Smart Tax Planning Strategies
- Spread retirement withdrawals across years
- Monitor MAGI carefully
- Coordinate Social Security and investment income
- Review Medicare premium thresholds (since those depend on AGI, not taxable income)
The deduction reduces taxable income, not AGI — meaning it won’t directly lower AGI-based surcharges.
Quick Comparison Table
| Feature | Before Update | After OBBBA |
|---|---|---|
| Higher Standard Deduction | Set to expire after 2025 | Permanent |
| Extra Senior Deduction | Regular age 65+ add-on only | Additional $6,000 (2025–2028) |
| Income Phase-Out | N/A | Begins at $75k (single) / $150k (joint) |
FAQs About the New Standard Deduction
1. Is the higher standard deduction permanent?
Yes. The OBBBA makes the expanded deduction amounts permanent beyond 2025.
2. Who qualifies for the new $6,000 senior deduction?
Taxpayers aged 65 or older between 2025 and 2028, subject to income limits.
3. Does the senior deduction reduce AGI?
No. It reduces taxable income, not Adjusted Gross Income (AGI).
4. Should I still itemize deductions?
Most taxpayers won’t need to, but high medical expenses or large deductions may justify it.
5. What happens after 2028?
The additional senior deduction is temporary and currently scheduled to expire after 2028 unless extended.
Final Thoughts: Plan Early to Maximize Benefits
The new standard deduction rules offer both stability and opportunity. The permanent extension simplifies long-term planning, while the temporary senior deduction creates a valuable four-year window for retirees to optimize tax strategies.
If you’re approaching retirement or managing fixed-income withdrawals, now is the time to review your income projections. A small adjustment in timing could protect thousands in deductions over the next few years.
Consider consulting a qualified tax professional to make sure you’re maximizing every available benefit under the updated law.