Effective for tax years 2025 through 2028, individuals aged 65 and older can claim a new, additional $6,000 federal income tax deduction ($12,000 for married couples) under the "One Big Beautiful Bill" Act. This deduction applies regardless of whether taxpayers itemize or take the standard deduction, reducing taxable income.
Senior 'bonus' deduction
The 2025 tax law offers a "bonus" deduction of up to $6,000 for Americans age 65 and older and up to $12,000 for married couples filing jointly to reduce the amount of federal income subject to tax.
The Senior Bonus Deduction added by OBBB
Starting in 2025, taxpayers who are 65 or older by year-end may claim an extra $6,000 deduction per person. Married couples filing jointly may claim $12,000 total if both spouses qualify. Available whether you itemize or take the standard deduction.
On a $6,000 bonus, your employer will likely withhold a flat 22% for federal taxes, meaning about $1,320 is withheld initially, but the actual tax depends on your total income and how it's paid, potentially falling under the 22% flat rate (supplemental wages) or your normal tax bracket if added to your regular pay (aggregate method). You'll also pay Social Security, Medicare, and state taxes (if applicable).
You must be aged 20 and below, or 55 and above, in the disbursement year. Lower-income senior Singapore citizens will receive cash payments of $600 to $900 through the AP Seniors' Bonus. The AP Seniors' Bonus will be disbursed over three years, from 2023 to 2025. The last disbursement was made in February 2025.
Some people like to deposit their bonus directly into an RRSP. If your employer does this, then there's no tax withholding. And the benefit is that you don't have to wait for a tax refund to start investing the amount.
The One Big Beautiful Bill Act (OBBBA) created a new tax deduction for seniors 65+ starting with the 2025 tax year, offering up to $6,000 for single filers and $12,000 for married couples.
For 2025, seniors over 65 get a new $6,000 extra standard deduction (or $12,000 for qualifying married couples) in addition to the existing senior deduction, thanks to the new "One Big Beautiful Bill," phasing out at higher incomes (e.g., $75k single, $150k joint MAGI) and applying through 2028.
While Senior Citizens between 60 to 80 years enjoy a basic exemption limit of Rs. 3 lakhs, super senior citizens above 80 years of age enjoy Rs. 5 lakhs basic exemption limit. However, the New Tax Regime does not offer any such kind of higher basic exemption limit for Senior and Super Senior Citizens.
The new $6,000 senior deduction (part of the One Big Beautiful Bill Act, effective 2025-2028) offers an additional tax break for seniors 65+, allowing a $6,000 deduction per eligible individual ($12,000 for couples) that can be claimed with the standard or itemized deductions, phasing out at higher incomes (starting at $75k single, $150k married).
The MAGI (modified adjusted gross income) limit is $75,000 ($150,000 for joint filers). If you make less than the limit, you may qualify for the full $6,000 deduction. The deduction starts phasing out by 6 cents for every dollar you're over the limit.
For eligible low-income seniors aged 55 to 70, every $1 topped up in their MediSave accounts will be matched by $1 from the Government, up to $1,000 per year for five years from 2026. This helps eligible seniors to boost healthcare savings, with more support to pay insurance premiums and approved medical treatments.
You must be aged 65 and above in 2025; The AV of your home (as indicated on your NRIC) as at 31 December 2024 must not exceed $31,000; and. You must not own more than one property.
In 1983, Congress increased the full retirement age (FRA) from 65 to 67, a change phased in over the course of 33 years. For individuals who reach age 62 in 2022 or later, the FRA is now static at age 67.
In many cases, recipients of bonuses pay a 22% flat federal income tax, along with a 6.2% Social Security tax and 1.45% Medicare tax. Fortunately, you can reduce the tax burden of a bonus by, for example, putting at least some of the money in a 401(k), IRA or health savings account.
Bonus contributed pre-tax to super
For example, tax on a $50,000 bonus: Paid to you and your marginal tax rate is 32.5% = $16,250. Paid to you and your marginal tax rate is 37% = $18,500.