WASHINGTON — As the calendar turns to 2026, millions of older Americans are looking at a significantly altered tax landscape. The Internal Revenue Service (IRS) officially opens the 2026 tax filing season on January 26, 2026, and for the first time, a revolutionary new tax break is taking center stage: the Senior Bonus Deduction.
Signed into law by President Trump on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) introduced sweeping changes aimed at middle-class relief. Chief among them is a provision that AARP and other advocacy groups say will help tens of millions of lower- and middle-income retirees keep more of their hard-earned money.
The $6,000 Bonus: How It Works
The centerpiece of the OBBBA for seniors is a new $6,000 deduction (or $12,000 for married couples) available to anyone age 65 or older by December 31, 2025.
Unlike many tax breaks, this is an “above-the-line” style benefit in its accessibility: you can claim it regardless of whether you itemize your deductions or take the standard deduction. This “stacking” effect is what makes the provision so potent for retirees on fixed incomes.
The “Triple Stack” of Deductions
For a single filer age 65 or older in the USA, the total amount of income shielded from federal tax has reached historic levels:
- Standard Deduction: $15,750
- Existing Additional Senior Deduction: $2,000
- New OBBBA Senior Bonus: $6,000
- Total Tax-Free Income: $23,750
For a married couple where both are 65+, that total rises to a staggering $46,700.
Who Qualifies? (The Income Caps)
To ensure the relief reaches those who need it most, the OBBBA includes a phase-out based on Modified Adjusted Gross Income (MAGI).
| Filing Status | Full Deduction Threshold | Phase-Out Range | Fully Eliminated At |
| Single | Up to $75,000 | $75,000 – $175,000 | $175,000+ |
| Married (Joint) | Up to $150,000 | $150,000 – $250,000 | $250,000+ |
The “6-Cent” Rule: For every dollar you earn over the threshold, your deduction is reduced by 6 cents. For example, if a single senior earns $80,000 ($5,000 over the cap), their deduction would be reduced by $300, leaving them with a still-substantial $5,700 break.
Impact on Social Security and Retirement Savings
While the law does not technically “stop” the taxation of Social Security, the sheer size of the new deduction effectively eliminates federal tax liability for an estimated 88% of seniors (approx. 51.4 million people).
“For many retirees, their Social Security benefits and modest pension withdrawals will now fall entirely under these new deduction thresholds,” says Bill Sweeney, AARP’s Senior VP of Government Affairs. “It’s essentially creating a tax-free zone for the average American senior.”
Additionally, for those still in the workforce, the IRS has raised retirement contribution limits for 2026:
- 401(k)/403(b) Limits: Increased to allow more aggressive saving.
- Catch-up Contributions: Enhanced for those nearing retirement age.
Important Filing Information for 2026
Taxpayers should look for the new Schedule 1-A when preparing their returns. This form is specifically designed to calculate the OBBBA deductions, including the senior bonus, as well as new exclusions for tip income and overtime pay.
Key Dates to Remember:
- Jan 26, 2026: IRS begins processing 2025 tax returns.
- April 15, 2026: Deadline to file or request an extension.
The Senior Bonus Deduction is currently scheduled to remain in effect through the 2028 tax year. Unless Congress acts to make it permanent, it will expire in 2029. For now, however, it represents one of the most significant shifts in senior tax policy in decades.