While life can certainly feel a little easier and more relaxed in retirement, there’s one thing that tends to get more complicated: your tax situation. Gone are the days of a simple paycheck with automatic withholdings. Now, it’s up to you (and your advisor or tax professional) to make heads or tails out of your multiple income sources like Social Security, 401(k) withdrawals, pension payouts, you name it.
It seems the IRS recognizes the unique challenges those in retirement face—like managing a tax bill while preserving wealth on a fixed income. To help keep your tax situation in check, here are five tax breaks offered specifically to seniors and those in retirement.
#1: Extra standard deduction
The standard deduction is already at an all-time high as a result of the 2017 Tax Cuts and Jobs Act (adjusted for inflation).1 Perhaps unsurprisingly, around 90% of taxpayers today opt for the standard deduction instead of itemizing.2
If you’re 65 or older (or under 65 and blind), there’s another reason why the standard deduction may be more appealing—you get an extra boost in savings.
For the 2024 tax year (returns filed by April 15, 2025), here’s what the standard deduction looks like for eligible senior filers:3
- Single: $16,550 (+$1,950)
- Married filing jointly, both spouses 65 or over: $32,300 (+$3,100)
- Married filing jointly, one spouse is 65 or over: $30,750 (+$1,550)
It’s important to note the IRS considers someone to be 65 or older if they were born on or before January 2, 1960.3
#2: Extra catch-up contributions
If you’re 50 or older and contributing to a 401(k), 403(b), traditional IRA, or Roth IRA, you can take advantage of catch-up contributions. These extra contributions surpass the annual contribution limit for tax-advantaged retirement accounts. Compounded across a decade or more, catch-up contributions have the potential to add significant growth to your retirement funds.
In terms of taxes, catch-up contributions to a tax-deferred account are funded with pre-tax dollars, meaning they lower your taxable income for the year the contributions are made. If you’re on the cusp of entering the next tax bracket, these additional contributions may lower your taxable income enough to prevent your tax rate from increasing.
Any amount you contribute with pre-tax dollars will grow tax-deferred until you make a withdrawal (hopefully in retirement). Once you begin pulling from the account, you’ll need to pay ordinary income tax on any amount withdrawn.
As part of the SECURE Act 2.0 passed in late 2022, changes were made to catch-up contributions—specifically for those between the ages of 60 and 63 contributing to employer-sponsored retirement plans.
Here’s what’s different in 2025, based on your retirement account:4
- 401(k)s, 403(b)s, 457s:
- Annual contribution limit: $23,500
- Catch-up contribution (for employees over 50): $7,500
- Extra catch-up contribution (for employees between 60 and 63): $3,750
- SIMPLE IRAs
- Annual contribution limit: $16,500
- Catch-up contribution (for employees over 50): $3,500
- Extra catch-up contribution (for employees between 60 and 63): $1,750
Those eligible to contribute to traditional IRAs and Roth IRAs can still make annual contributions of $7,000, with a catch-up contribution of $1,000 (for a total of $8,000). No extra catch-up contributions were added for IRAs.4
#3: Spousal IRA
To be eligible to contribute to an IRA, you must have earned income (at least equal to the amount contributed to the account). If you retire fully—meaning no part-time work or freelancing—you’re no longer earning income.
But, if your spouse is still working (or vice versa, you’re working and your spouse is retired), you may be eligible to contribute to a spousal IRA. To qualify for a spousal IRA, you must use a married filing jointly tax status. Both spouses can contribute up to the annual contribution limit ($8,000 for those 50 and older, for a total of $16,000), as long as your combined contributions do not exceed the amount of income reported on last year’s tax return.5
Just like a 401(k), the funds put into a spousal IRA are tax-deferred, meaning you can deduct them from your taxable income this year. While you can’t kick the tax can down the road forever, this could help reduce your tax bill in a higher-than-usual income year—say, if one spouse is just reaching their peak earning years while the other is transitioning to retirement.
#4: Deduct Medicare premiums (for self-employed retirees)
Some people view retirement as an opportunity to embark on an encore career—or at least, pursue a passion like writing, teaching, or consulting. If you find yourself self-employed in retirement, you may be able to deduct your Medicare premiums from your taxes. Whether you’re operating as a sole proprietor, partner, LLC, or S corporation owner, Medicare premiums can be counted as your self-employment health insurance deduction.6
This deduction applies to premiums for all Medicare parts including A, B, D, and C (or Medicare Advantage), plus any additional premiums paid toward Medigap or supplemental coverage.
The typical cost of Medicare premiums in 2025 include:7
- Part A: Free (since you likely paid into them during your working years, otherwise it’s $518 a month)
- Part B: $185/month is the standard, but the range goes up to $628.90/month, depending on your modified adjusted gross income (MAGI) over the previous two years
- Part C: Varies based on provider
- Part D: Varies by plan, but the national average is $36.78/month. This will increase based on your MAGI
Spread across a full tax year, these premiums can add up to an extra couple thousand of dollars deducted from your total taxable income.
#5: Credit for the elderly or disabled
Some seniors may be eligible for a low-income tax credit, though there are several stipulations, which can get confusing.
First, you, your spouse, or both you and your spouse will need to be over 65. If you’re under 65, you may still count as a “qualified individual” if you are retired and considered “permanently and totally disabled”.8
If you meet either of those requirements, you will then move on to two income tests.
The first is regarding your adjusted gross income (AGI). Your AGI will need to be less than:8
- Single filer: $17,500
- Married filing jointly, only one spouse qualifies: $20,000
- Married filing jointly, both spouses qualify: $25,000
- Married filing separately, and you’ve lived apart from your spouse for the entire year: $12,500
The second income test relates to your nontaxable income, including the nontaxable portion of Social Security benefits, pension payouts, annuities, or disability income. This amount needs to be less than:8
- Single filer: $5,000
- Married filing jointly, only one spouse qualifies: $5,000
- Married filing jointly, both spouses qualify: $7,500
- Married filing separately, and you’ve lived apart from your spouse for the entire year: $3,750
If you meet the criteria, you can file for the tax credit—though the amount you’re awarded will depend on your specific circumstances. To calculate this credit, you’ll need to fill out a Schedule R form. The IRS provides additional guidance on the Schedule R form on their website.
Two extra tips for seniors at tax time
In addition to taking advantage of the deductions and credits shared above, there are two additional steps seniors may want to take when preparing to file at tax time.
#1: Look into free filing assistance programs
First, if you don’t work with an accountant or find it difficult to file your taxes on your own, consider engaging with tax filing assistance programs.
The IRS offers a few programs including:9
- Volunteer Income Tax Assistance (VITA): This program is geared toward helping those earning $67,000 or less with their basic tax filing needs. It can also be used by those with disabilities or who may speak limited English.
- Tax Counseling for the Elderly (TCE): Designed specifically for seniors, this program offers free tax advice and filing assistance for retirees, with a focus on navigating pensions and other retirement-related tax concerns.
- AARP Foundation Tax-Aide: Popular senior-focused organization AARP offers an IRS-certified free tax filing and assistance service for those who are over 50 and may have low or moderate income.
Even if you’ve spent decades filing your taxes on your own, juggling the tax liability of your retirement income sources is a whole different ball game. Consider checking out these free, IRS-approved programs for more information on potential deductions, credits, and tax-minimizing strategies you can use to keep your tax bill manageable.
The IRS-certified experts who volunteer with these programs can help make sure your returns are filed on time and correctly—helping you avoid potential penalties or fines.
#2: Check your state's incentives for seniors
Some states are considered more “retirement friendly” than others, thanks in large part to their tax incentives for seniors. Some states don’t tax Social Security income, while others forego any sort of estate or inheritance tax.
Some states also offer property tax relief programs, including deferrals or credits, specifically for seniors. You’ll want to check your state’s specific offerings to see what may be applicable to your financial circumstances.
Preserve more of your wealth in retirement
While it’s never a good time to pay more in taxes than you have to, wealth preservation becomes especially important as you enjoy retirement. The less you must give away to Uncle Sam over your lifetime, the more you can keep in savings to grow, compound, and ultimately support your financial needs and goals.
The good news is, seniors have a few extra deductions and credits at their disposal—plus free resources from the IRS and other reputable programs to make tax filing a more manageable task each year.
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