The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, extended key provisions of the Tax Cuts and Jobs Act and introduced new, time‑limited tax breaks aimed specifically at older Americans. Whether you are preparing your 2025 tax return or planning ahead, the following seven strategies may help you reduce taxes and coordinate your financial plan more effectively.

1. Enhanced Standard Deduction for 2025

Taxpayers who do not itemize deductions may claim the standard deduction. Under current law, the OBBBA made the increased standard deduction amounts permanent and raised them again for 2025:

• $15,750 for single filers
• $23,625 for heads of household
• $31,500 for married couples filing jointly

These amounts will continue to be adjusted annually for inflation.¹

In addition, taxpayers age 65 or older (or who are blind) may claim an additional standard deduction. For 2025, this additional amount is:

• $2,000 for unmarried individuals age 65 or older
• $1,600 per spouse for married couples filing jointly

These amounts are cumulative if both spouses qualify.²

2. New Senior Deduction (Ages 65+)

Beginning in 2025, the OBBBA introduced a new senior deduction for taxpayers age 65 and older. Eligible individuals may deduct up to $6,000 per person, whether they itemize or take the standard deduction. Married couples filing jointly may claim up to $12,000 if both spouses qualify.³

This deduction is subject to income‑based phaseouts:

• Phaseout begins at $75,000 MAGI for single filers and $150,000 MAGI for joint filers
• Fully phased out at $175,000 and $250,000, respectively

This provision is currently scheduled to apply only for tax years 2025–2028.³

3. Catch‑Up Contributions (Age 50 and Older)

Taxpayers age 50 and older may make catch‑up contributions to retirement accounts beyond standard contribution limits. For 2026, these limits include:

401(k) plans:

• Standard deferral: $24,500
• Catch‑up contribution: $8,000
• Total possible deferral: $32,500

Traditional and Roth IRAs:

• Standard contribution: $7,500
• Catch‑up contribution: $1,100
• Total possible contribution: $8,600

Contribution limits are indexed annually for inflation.⁴

Important: Beginning in 2026, the SECURE 2.0 Act requires catch‑up contributions for higher‑income taxpayers (generally those earning more than $150,000 in prior‑year wages) to be made as Roth (after‑tax) contributions in employer‑sponsored plans.⁵

4. “Super” Catch‑Up Contributions (Ages 60–63)

SECURE 2.0 introduced enhanced “super” catch‑up contributions for individuals who are ages 60 through 63 at year‑end. For 2026, eligible taxpayers may contribute up to $11,250 in catch‑up contributions—150% of the standard catch‑up amount.⁶

This allows total 401(k) deferrals of up to $35,750 for qualifying individuals in this age range. Once a taxpayer reaches age 64, the regular catch‑up limits apply again.

The Roth treatment requirement for higher‑income taxpayers applies to these contributions as well.⁵

5. Spousal IRAs

Married couples may contribute to an IRA for a nonworking spouse, provided they file a joint return and have sufficient earned income. This strategy can be especially useful when one spouse has retired and the other continues to work.

For 2026, a couple in which both spouses are age 50 or older may contribute up to $17,200 combined to IRAs. Depending on income and participation in employer plans, contributions may be fully or partially deductible.⁷

6. Penalty‑Free Retirement Distributions (Before Age 59½)

Generally, distributions from retirement accounts taken before age 59½ are subject to a 10% penalty. One exception is the use of substantially equal periodic payments (SEPPs), which allow penalty‑free withdrawals if strict IRS rules are followed.

SEPP calculations and compliance requirements can be complex, and professional guidance is strongly recommended before implementing this strategy.⁸

7. Qualified Charitable Distributions (QCDs)

Taxpayers age 70½ or older may transfer funds directly from an IRA to a qualified charity through a Qualified Charitable Distribution (QCD). These transfers are excluded from taxable income and count toward required minimum distributions (RMDs).

For 2026:

• Annual QCD limit: $111,000 per taxpayer
• One‑time transfer to a charitable remainder trust or charitable gift annuity: $55,000

Because QCDs are excluded from adjusted gross income, they may help reduce exposure to income‑based phaseouts, Medicare premium surcharges, and taxation of Social Security benefits.⁹

Coordinating the Strategy

Tax laws affecting older taxpayers continue to evolve, and recent changes have created meaningful planning opportunities. However, eligibility rules, income thresholds, and expiration dates can significantly affect outcomes.

At PKS, we believe tax planning is most effective when it is coordinated with retirement, investment, and charitable strategies—so decisions work together, not in silos. We encourage you to consult with your tax and wealth advisors to identify which of these opportunities apply to your situation and how they may fit into your broader financial plan.

A Note on Required Minimum Distributions

Under current law, required minimum distributions generally begin at age 73. For individuals born in 1960 or later, the starting age will increase to 75 in 2033. Roth IRAs are not subject to RMDs during the account owner’s lifetime.¹⁰