NEWS
A new federal rule gives people age 65 and older access to a larger deduction in 2025, allowing many workers to increase their monthly pay before filing a tax return. The enhanced senior deduction applies nationwide under current law; however, payroll systems will not automatically apply it. Eligible employees must update their 2025 Form W-4 to reflect the change for it to take effect.
The deduction amounts to $6,000 for qualifying single filers and $12,000 for joint filers who file jointly, provided both spouses meet the age requirement. The IRS states that the amount applies regardless of whether a taxpayer claims the standard deduction or itemized deductions. This benefit is separate from the age-based deduction that older taxpayers already receive.
According to the IRS, “Workers may need to update their withholding to account for changes to deductions for 2025.” The agency warns that failing to revise withholding may result in reduced potential tax savings throughout the year. Workers relying on retirement income or Social Security benefits may want to confirm whether additional adjustments are needed based on their filing status.
The deduction is not available in full to all taxpayers. Phase-outs begin at:
For people age 65 and older with modest wages or retirement income, the deduction will often apply in full. Higher earners may see the deduction fall as taxable income increases. Tax professionals note that income from a retirement plan, IRA withdrawals, or investment activity may impact eligibility, depending on how it contributes to adjusted gross income.
Employees must file the updated 2025 Form W-4 to activate the benefit. The deductions worksheet has been revised to reflect the enhanced senior deduction and related tax law changes. The IRS withholding estimator includes several 2025 updates but does not yet incorporate the full senior deduction.
Taxpayers who receive pension or annuity income should review Form W-4P. Those without wage income may need to adjust estimated tax payments to avoid an unexpected tax bill. A tax professional or financial planner can help seniors coordinate withholding across wages, retirement income, and other sources reported on Form 1099 or Form W-2.
A 66-year-old worker earning $45,000 may qualify for the full deduction. At a 12 percent marginal rate, the change reduces her tax bill by about $720. Filing an updated W-4 early spreads that benefit across the year instead of waiting until she files a tax return.
The deduction is available through 2028 under Public Law 119-21. Seniors with multiple income streams should check withholding across wages, retirement income, and taxable benefits to avoid over- or under-withholding. Financial planning experts recommend reviewing withholding annually, especially when new tax rules or adjustments to the tax code are introduced.
By William Mc Lee, Editor-in-Chief & Tax Expert—Get Tax Relief Now
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