1. The Higher Standard Deduction for Seniors

This is one of the most straightforward and beneficial tax breaks for retirees, yet many people are not aware of exactly how it works. As we saw in the example above, the tax code provides a larger standard deduction for individuals who are age 65 or older at the end of the tax year.

This is not a separate deduction you have to apply for; it is an automatic increase to your standard deduction amount. The IRS views it as a simple way to provide tax relief to older Americans who may be living on a fixed income.

How It Works

The amount of the additional deduction depends on your filing status. For Tax Year 2024:

If you are filing as Single or Head of Household, you can increase your standard deduction by $1,950 if you are 65 or older.

If you are Married Filing Jointly, Married Filing Separately, or a Qualifying Surviving Spouse, you can increase your deduction by $1,550 for each spouse who is 65 or older. This means if both you and your spouse are over 65, your total increase is $3,100 ($1,550 x 2).

There is also an identical additional amount if you are legally blind, regardless of your age. So, a 70-year-old single individual who is also blind could add $1,950 for age and another $1,950 for blindness to their standard deduction, for a total increase of $3,900.

Why It Matters

This higher deduction makes it much more likely that you will benefit from taking the standard deduction rather than itemizing. Because the bar is higher, it takes a larger amount of itemized expenses to make it worthwhile. This simplifies tax filing for millions of seniors and is a key part of how to save on taxes in retirement. Always be sure that you or your tax software correctly accounts for your age when calculating your standard deduction.