The One Big Beautiful Bill Act (OBBBA), signed in 2025, gives taxpayers 65 and older an increased standard deduction through 2028. Married filing jointly with both spouses 65+: extra $6,000 each, total $12,000 added to the base standard deduction. Single filers 65+: extra $6,000. No itemizing needed.
Key planning considerations:
- Roth Conversions: The extra deduction reduces taxable income in the conversion year. Convert traditional IRA funds while staying in a lower bracket instead of moving into a higher bracket. Lower tax now, tax-free growth potential and tax-free withdrawals later.
- Bracket Management: The added deduction may provide additional room to realize capital gains, take larger distributions from qualified accounts, or receive other income without jumping tax brackets. It also may reduce taxation on Social Security benefits by keeping provisional income lower.
- Social Security Timing: The optimal claiming age varies by health, longevity, spousal benefits, and cash flow needs. The extra deduction may lower taxes on other income sources during any bridge period before claiming, supporting individualized timing decisions.
- Qualified Charitable Distributions (QCDs): Age 70½+: direct up to $105,000 (2026 indexed amount) from IRA to charity. It counts towards RMD requirements, excludes the amount from taxable income, and the extra deduction may further reduces tax on remaining income.
The extra deduction is slated to expire after 2028 but may be extended. At this time, 2026–2028 is the window to consider these strategies.
https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers