Is There a Federal Tax Deduction for Being Over 65?

The U.S. federal tax system accounts for various taxpayer circumstances, including age, to determine tax obligations and potential benefits. For those aged 65 and older, certain provisions exist within the tax code that can reduce taxable income or directly lower the amount of tax owed. This article explores two such federal tax benefits: the increased standard deduction for seniors and the Credit for the Elderly or the Permanently and Totally Disabled.

Increased Standard Deduction for Seniors

The standard deduction provides a fixed dollar amount that taxpayers can subtract from their adjusted gross income (AGI). It varies based on filing status and is adjusted annually for inflation.

Taxpayers who are age 65 or older, or who are blind, are eligible for an additional standard deduction amount. For the 2024 tax year, this additional amount is $1,950 for single filers or heads of household. If married filing jointly or separately, the additional amount is $1,550 per qualifying individual.

To qualify as “age 65” for tax purposes, an individual must reach their 65th birthday by the last day of the tax year. This additional deduction is claimed by checking appropriate boxes on Form 1040 or Form 1040-SR.

Electing the standard deduction is often more advantageous if eligible itemized deductions (e.g., medical expenses, state and local taxes) are less than the total standard deduction, including additional amounts. This increased standard deduction benefits seniors by offering a straightforward way to reduce taxable income without tracking numerous itemized expenses.

Credit for the Elderly or the Permanently and Totally Disabled

A tax credit directly reduces the amount of tax owed, which is different from a deduction that only reduces taxable income. The Credit for the Elderly or the Permanently and Totally Disabled is a nonrefundable credit, meaning it can reduce a taxpayer’s tax liability to zero, but it will not result in a refund beyond that. This credit provides tax relief for qualifying older adults and individuals with certain disabilities.

Eligibility for this credit depends on meeting specific age or disability criteria and income limitations. Individuals must be age 65 or older at the end of the tax year. Alternatively, individuals under age 65 may qualify if they are permanently and totally disabled, retired on disability, and received taxable disability income for the year, provided they had not reached their employer’s mandatory retirement age by January 1 of the tax year.

The credit amount is determined by Adjusted Gross Income (AGI) and nontaxable pension or annuity income, such as Social Security benefits. Income limitations apply, preventing the credit if AGI or nontaxable income exceeds certain thresholds. For example, in 2024, single filers, heads of household, or qualifying surviving spouses cannot claim the credit if their AGI or nontaxable Social Security/pension income exceeds specific thresholds ($17,500 AGI or $5,000 nontaxable income). Married couples filing jointly have higher thresholds, such as $25,000 AGI if both qualify, or $20,000 AGI if only one spouse qualifies.

The credit is calculated based on an initial base amount. For single individuals, heads of household, or qualifying widow(er)s, the base amount is $5,000. For married couples filing jointly, the base amount is $7,500 if both spouses are eligible, or $5,000 if only one spouse qualifies.

This base amount is then reduced by nontaxable benefits, such as Social Security, and by one-half of the AGI that exceeds specific limits. The resulting figure is then multiplied by 15%. This credit is claimed by completing Schedule R, Credit for the Elderly or the Permanently and Totally Disabled, and then transferring the calculated amount to Form 1040.