Older doesn't mean worse. Seniors can save big on taxes using these two items.
It's a good time to be an older American, at least for taxes. There are two items that only older adults can use to save a little this year and, maybe, a little extra next year on taxes.
Americans ages 65 years and older can claim the extra standard deduction this year, and some ages 60 to 63 can set themselves up now for even more savings in 2026 using super catch-up contributions.
Both of these help seniors reduce their taxable income, which could mean less tax to pay and more money in their wallet.
What is the standard deduction?
When filing taxes, everyone can reduce their taxable income by choosing between a fixed amount, called the standard deduction, or itemizing if their deductions are greater than the standard deduction.
Everyone's standard deduction amounts for tax year 2024 are:
- $29,200 – married filing jointly or qualifying surviving spouse
- $21,900 – head of household
- $14,600 – single or married filing separately
What's the extra standard deduction?
If you're 65 or older or blind, you get an additional deduction, which varies depending on filing status, whether you or your spouse is at least 65, and whether you or your spouse is blind. Here's how it works:
- $1,950 for single or head of household or blind taxpayer.
- $1,550 for married taxpayers (per qualifying person) or qualifying surviving spouse or blind taxpayer.
That means, for example, a single person who is 65 or older or blind would have a total standard deduction of $16,550 ($14,600 standard deduction plus $1,950 extra standard deduction).
Or a married couple of two 65-plus adults would take a total deduction of $29,200 (standard deduction) plus $1,550 for one 65-or-older adult plus $1,550 for a second 65-plus adult, equaling $32,300.
If you're 65 years or older and blind, your additional standard deduction would equal the sum of the additional amounts for both age and blindness.
- $3,900 if you are single or filing as head of household.
- $3,100 per qualifying individual if you are married, filing jointly or separately.
Note: For tax year 2024, the IRS considers you 65 years old if you were born before Jan. 2, 1960. You're allowed an additional deduction for blindness if you're blind on the last day of the tax year. The IRS has specific guidelines for what's considered blind.
What is the super-catch-up contribution?
In 2025, for the first time, Americans ages 60 to 63 by the end of the calendar year have an opportunity to rev up their retirement savings with a supersized catch-up contribution that can help reduce your taxable income when you do your taxes next year.
Catch-up contributions for participants ages 50 and up in workplace plans, including 401(k)s, 403(b)s, governmental 457 plans and the federal government’s Thrift Savings Plan, are $7,500. That means their total contribution for 2025 is capped at $31,000 (the standard deferral cap for everyone of $23,500 plus a $7,500 catch-up contribution).
But thanks to the Secure Act 2.0 that passed at the end of 2022, employees ages 60 to 63 who participate in one of those work plans have a higher catch-up contribution limit starting this year. That cap is $11,250 instead of $7,500, which brings the maximum amount of deferrals allowed to $35,000.
(Note: when you turn 64, the catch-up contribution limit reverts to the regular cap of $7,500.)
Not all employers may be offering these supersized contribution limits yet, though. "Technically, there is no law that says that employers must offer a super-catch-up contribution, so I believe an employer’s retirement plan must be amended to specifically allow for a super-catch-up contribution," said certified public accountant Richard Pon in San Francisco.
So ask your employer. If the company doesn't offer those contributions yet, lobby for it, experts say.
Not only would the higher cap allow eligible employees to lower their taxable income, but "increased savings during key pre-retirement years could help some who haven’t been able to save as much earlier in their careers," financial services firm Voya said.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.