The Overlooked Tax Break for Retirees

The Overlooked Tax Break for Retirees: The Additional Standard Deduction for Seniors

When people think about tax planning in retirement, they often focus on Roth conversions, Required Minimum Distributions (RMDs), or Social Security taxation. But one of the simplest tax breaks available is also one of the most overlooked—the additional deduction available to seniors.

If you’re age 65 or older, you may qualify for two different tax benefits.

First, the tax code has long provided an additional standard deduction simply for being 65 or older. This increases the amount of income you can earn before paying federal income tax.

On top of that, a newer law created an enhanced senior deduction that allows many taxpayers age 65 and older to deduct up to an additional $6,000 per eligible person ($12,000 for many married couples) for tax years 2025 through 2028, subject to income limitations. Unlike the traditional age-based standard deduction, this enhanced deduction is available whether you claim the standard deduction or itemize your deductions, making it valuable for a much larger group of retirees.

For many retirees, this means thousands of dollars of additional income can be shielded from federal taxes each year. That can reduce the taxation of retirement account withdrawals, lower overall tax liability, and create opportunities for more tax-efficient retirement income planning.

This is why retirement tax planning is about much more than simply filing a tax return. The order in which you withdraw money from Traditional IRAs, Roth IRAs, taxable brokerage accounts, pensions, and Social Security can have a significant impact on your lifetime tax bill.

A well-designed retirement income strategy takes advantage of every deduction available—including the additional deductions for seniors—to help keep more money in your pocket.

The goal isn’t just to earn more in retirement. It’s to keep more of what you’ve earned.

Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

Colin Symons, CIO Lloyd Financial Group

The Trade Deficit was $73.3B vs. prev. $77.6B, with Exports $314.7B vs. prev. $317.7B and Imports $388B vs. prev. $395.3B.

JOLTS Job Openings were 7.359M vs. exp. 7.454. That’s a little weak, but the ratio of job openings to unemployed workers hit the best since January. Overall, decent.

Factory Orders fell for a second month, at -0.3% m/m vs. exp. 0.2%. Core Orders were -0.4% vs. prev. 2%.

Oil was -6% amid encouraging talk about a temporary peace deal.

Semis (SMH) were almost 6% higher yesterday on news the US drafted a ban on Chinese optics used in datacenters, along with a thought a memory ban may be coming. Strong rebound from past success, though we’re getting a little fade to start the day.

Novo Nordisk (NVO) was down -6% despite raising guidance. I expect the problem is that even with the raise, they’re talking about negative growth. Also, the upgrade was more about US rebates than demand improving.

AMD is down -8% after a beat and raise wasn’t enough to overcome concerns on increased capex and news SPCX would no longer buy their chips.

Similarly, SpaceX (SPCX) is down -11% after they announced good earnings but heavy spending on AI.

ADP Employment and ISM Services today.

Bottom line: Quite the bounce in the AI trade, yesterday, though we’re fading that a bit this morning.

Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

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