Section 70103 of Public Law 119-21 ended the personal exemption deduction permanently, but carved out a temporary deduction for older taxpayers in new section 151(d)(5)(C). The IRS calls it the enhanced deduction for seniors. It applies to taxable years beginning after December 31, 2024 and before January 1, 2029, so 2025 through 2028 for calendar-year filers. For many retired clients it is the largest new item on the return. This article covers the rules, the arithmetic and the questions to ask.
Who qualifies?
The statute allows a deduction of $6,000 for each "qualified individual." A qualified individual is:
- the taxpayer, if the taxpayer has attained age 65 before the close of the taxable year; and
- on a joint return, the taxpayer's spouse, if the spouse has attained age 65 before the close of the taxable year.
Publication 554 (2025) applies this as a birth-date test. For 2025, the taxpayer (or spouse on a joint return) must have been born before January 2, 1961. That follows from the long-standing rule that a person is considered to reach age 65 on the day before the 65th birthday, so someone born on January 1, 1961 was 65 at the end of 2025. The cutoff date moves forward one year for each later tax year.
Three other requirements apply:
- Social security number. The qualified individual's SSN must be on the return. Publication 554 says the SSN must be valid for employment and issued by the Social Security Administration before the due date of the return, including extensions. An ITIN does not work. Omission of a correct SSN is treated as a mathematical or clerical error under section 6213(g)(2), so the IRS can adjust it summarily.
- Joint return if married. A married individual must file jointly to take the deduction. A married client who files separately gets nothing, even if both spouses are over 65.
- Each spouse tested separately. Publication 554 gives a maximum of $6,000, or $12,000 on a joint return if both spouses qualify. A couple with one spouse 66 and the other 63 gets one $6,000 amount.
Publication 554 adds that the special rules for U.S. nationals and residents of Canada, Mexico and South Korea, and residents of India who were students or business apprentices, do not apply to this deduction.
How does the phase-out work?
The $6,000 amount is reduced, but not below zero, by 6 percent of modified adjusted gross income above $75,000, or $150,000 on a joint return. MAGI is adjusted gross income increased by amounts excluded under section 911 (foreign earned income), 931 or 933 (possession income).
For a single filer, the arithmetic is direct:
- MAGI of $95,000 is $20,000 over the threshold. 6 percent of $20,000 is $1,200. The deduction is $4,800.
- The deduction reaches zero when MAGI is $100,000 over the threshold, since 6 percent of $100,000 is $6,000. For a single filer, that is MAGI of $175,000.
For joint returns, the statute reduces "the $6,000 amount" allowed for each qualified individual, using the $150,000 threshold. Compute it on the Schedule 1-A worksheet in the 2025 Form 1040 instructions rather than by hand, and keep the worksheet in the file.
Because the phase-out keys off MAGI, every dollar of income in the phase-out range costs an extra 6 cents of deduction for each qualified individual. That is effectively a higher marginal rate for clients in the band, and it matters for planning.
How does it interact with the standard deduction?
It stacks. Publication 554 says the enhanced deduction is in addition to the higher standard deduction for taxpayers 65 or older. For 2025, Publication 554 shows that additional standard deduction amount as $1,600 per qualifying person, or $2,000 for single or head of household filers.
It is also available to itemizers. The IRS states that qualified individuals can claim it whether they take the standard deduction or itemize. The deduction is claimed in Part V of Schedule 1-A, and the Schedule 1-A total goes on Form 1040 or 1040-SR, line 13b, according to the IRS fact sheet on the new schedule.
Because the senior amount is allowed either way, it does not change the itemize-or-standard comparison. That comparison still turns on mortgage interest, state and local taxes, charitable gifts and medical costs against the standard deduction.
Planning points for older clients
Manage MAGI inside the band. For clients with MAGI near or inside the phase-out range, the timing of income items matters for 2025 through 2028:
- IRA and retirement plan distributions above required amounts.
- Roth conversions, which add to MAGI in the year of conversion.
- Capital gain realizations and the sale of a residence above the exclusion.
- Taxable social security benefits, which rise as other income rises.
Spreading a conversion or a large distribution over several years, or holding it until after 2028, can keep part of the deduction. Run the numbers both ways; the deduction is not large enough to justify every deferral.
Charitable giving. Giving methods that reduce AGI, rather than producing an itemized deduction, also reduce MAGI for this test. For clients who give regularly from IRA assets, review whether the method used lowers AGI.
Filing status. Married couples who file separately for liability or student loan reasons lose the deduction completely. Quantify that cost before recommending separate returns.
Withholding and estimates. Retirees who pay quarterly estimates or have withholding on pensions may be overpaying now. Update projections; see estimated tax payments and safe harbors.
Working seniors. A client over 65 who still works for tips or overtime may also qualify for those deductions, each with its own cap and phase-out. See the qualified tips deduction and the qualified overtime deduction. All of these are claimed on Schedule 1-A.
Review steps for preparers
- Confirm date of birth for each spouse against the cutoff for the tax year.
- Confirm each qualified individual's SSN is valid for employment.
- Confirm joint filing if married.
- Compute MAGI, including any excluded foreign or possession income.
- Check the Schedule 1-A Part V computation and the amount on line 13b.
- Flag clients near the phase-out range for income timing in the next year.
- Note in the file that the deduction expires after 2028, so multi-year projections for 2029 should exclude it unless the law changes.
Business owners over 65 will see this alongside other changes from the same law; for the business side, see the 2026 business tax changes checklist.
CORAA prepares ready-to-review audit files for US CPA firms; see /us.
Sources
- U.S. Government Publishing Office, Public Law 119-21 (section 70103): https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm
- IRS, Publication 554 (2025), Tax Guide for Seniors: https://www.irs.gov/pub/irs-pdf/p554.pdf
- IRS, New Schedule 1-A and Form 1040 instructions show how taxpayers will claim important deductions (IR-2026-28): https://www.irs.gov/newsroom/irs-published-schedule-taxpayers-will-use-to-claim-deductions-on-no-tax-on-tips-no-tax-on-overtime-no-tax-on-car-loans-no-tax-on-seniors
- IRS, Schedule 1-A, Additional Deductions: What to know about the new form (FS-2026-04): https://www.irs.gov/newsroom/schedule-1-a-additional-deductions-what-to-know-about-the-new-form
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