Tax Breaks for Older Adults and Retirees for Tax Year 2022

Ways for people 65 years and older to save on their taxes

Mature couple doing paperwork using laptop
Photo: Andersen Ross/ Digital Vision/ Getty Images

Older adults and people who are retired can take advantage of additional tax breaks and savings when it comes time to file their taxes. For starters, there is a larger standard deduction for people over the age of 65. You may also receive a tax credit.

If you're an older adult or a newly retired person, keep reading to learn about the tax breaks you can take advantage of this tax season.

Key Takeaways

  • The U.S. tax code offers quite a few tax breaks exclusively to older adults, including a special tax credit just for those 65 or older.
  • If you're age 65 or older, you get a larger standard deduction, which might make it hard to choose between an itemized deduction and a standard deduction.
  • You have a higher filing threshold and receive a tax credit.
  • Your Social Security benefits may be considered taxable income. It depends on your overall earnings.

A Larger Standard Deduction for Older Adults

You won't have to pay taxes on as much of your income, because the IRS allows you to begin taking an additional standard deduction when you turn 65.

For tax year 2022—the tax return you file in 2023—you can add an extra $1,750 to the standard deduction you’re otherwise eligible for, as long you are unmarried and not a surviving spouse. You can add $1,400 if you’re married and file a joint return. In tax year 2023, you can add an extra $1,850 and $1,500, respectively, to your standard deduction.

Note

You must turn 65 by Jan. 1 to qualify for it for the previous tax year.

Should You Take the Standard Deduction or Itemize Your Deductions?

You have a choice between claiming the standard deduction or itemizing your deductions, but you can't do both. And the Tax Cuts and Jobs Act (TCJA) pretty much doubled the basic standard deductions for all filing statuses—the deduction you can claim before you claim the extra bonus deduction for being age 65 or older, making it a somewhat difficult decision.

For tax year 2022, the base standard deductions before the bonus add-on for older adults are:

  • $25,900 for married taxpayers who file jointly, and qualifying widow(er)s
  • $19,400 for heads of household
  • $12,950 for single taxpayers and married taxpayers who file separately

Many older taxpayers may find that their standard deduction plus the extra standard deduction for age works out to be more than any itemized deductions they can claim, particularly if their mortgages have been paid off and they don't have that itemized interest deduction any longer. But you could gain a larger deduction for itemizing if you still have a mortgage and factor in things such as property taxes, medical bills, charitable donations, and any other deductible expenses you might have.

A Higher Tax Filing Threshold

Your threshold for having to file a tax return in the first place is also higher if you’re age 65 or older, because the filing threshold generally equals the standard deduction you’re entitled to claim.

Most single taxpayers must file tax returns when their earnings reach $12,950 (the amount of the standard deduction), but your deduction can go up to $14,700 if you’re age 65 or older (the standard deduction plus the additional $1,750). You can jointly earn up to $27,300 if you or your spouse is 65 or older and you file a joint return. If you’re both 65 or older, your deduction could be $27,800.

Taxable Social Security Income

Your Social Security benefits might or might not be taxable income. It depends on your overall earnings.

Add up your income from all sources, including taxable retirement funds other than Social Security and what would normally be tax-exempt interest. Then add half of what you collected in Social Security benefits during the course of the tax year. The Social Security Administration (SSA) should send you Form SSA-1099 around the first day of the new year, showing you exactly how much you received.

You don’t have to include any of your Social Security as taxable income if the total of all your other income and half your Social Security is less than $25,000 and you’re single, a head of household, or a qualifying widow or widower. That increases to $32,000 if you’re married and filing a joint return, and it drops to $0 if you file a separate return after living with your spouse at any point during the tax year.

If you earn more than $32,000 as an individual or $44,000 as a married joint filer, up to 85% of what you collect in Social Security might be taxable.

Note

The IRS offers an interactive tool to help you determine whether any of your Social Security is taxable, and if so, how much.

Tax Credits for Older Adults

One of the most significant tax breaks available to older adults is the tax credit for the elderly and disabled. This tax credit can wipe out some, if not all, of your tax liability if you end up owing the IRS.

You must be age 65 or older as of the last day of the tax year to qualify. That Jan. 1 rule applies here, too; you’re considered to be age 65 at the end of the tax year if you were born on the first day of the ensuing year. You must be a U.S. citizen or a resident alien, but if you’re a non-resident alien, you might qualify if you’re married to a U.S. citizen or a resident alien.

In general, you must file a joint married return with your spouse to claim the credit if you’re married unless you didn’t live with your spouse at all during the tax year. And you won’t be eligible for this credit if you earn more than the following:

  • $17,500 or more and your filing status is single, head of household, or a qualifying widow or widower
  • $20,000 or more and you’re married, but only one of you otherwise qualifies for the credit
  • $25,000 or more, and you file a joint married return
  • $12,500 or more, and you file a separate married return, but you lived apart from your spouse all year

Note

These numbers are based on your adjusted gross income (AGI), not your total income. Your AGI is arrived at after taking certain deductions, also known as "adjustments to income," on Schedule 1.

Limits also apply to the nontaxable portions of your Social Security benefits, as well as to nontaxable portions of any pensions, annuities, or disability income you might have. Those limits are as follows:

  • $5,000 or more, and your filing status is single, head of household, or qualifying widow or widower
  • $5,000 or more, and you’re married, but only one of you otherwise qualifies for the credit
  • $7,500 or more, and you file a joint married return
  • $3,750 or more, and you file a separate married return, but you lived apart from your spouse all year

Frequently Asked Questions (FAQs)

Which states provide the best tax breaks for retirees?

Many states exempt Social Security income from taxation, and some states don't tax income at all. The best states to retire in for tax reasons may be Alabama, Hawaii, Illinois, Mississippi, and Pennsylvania.

How do you earn tax breaks in your retirement years?

Once you turn 65, you automatically have a larger standard deduction available, so be sure you're taking advantage of that if you're not itemizing deductions. When you reach age 70 1/2, you can also reduce your tax liability by giving some of your IRA distributions directly to a charity. This counts toward your required minimum distributions. Talk to your financial advisor about other ways to lower your taxes in retirement.

Do you have to pay income tax after age 70?

A portion of your income from Social Security, pensions, disability, and annuities is nontaxable, but if you make more than the limits, you will still have to pay some taxes after age 70.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. "26 CFR 601.602: Tax Forms and Instruction (2022)."

  2. IRS. "26 CFR 601.602: Tax Forms and Instructions (2023)."

  3. IRS. "Social Security Income." See "I retired last year and started receiving Social Security payments. Do I have to pay taxes on my social security benefits?"

  4. Social Security Administration. "Retirement Benefits: Income Taxes and Your Social Security Benefit."

  5. IRS. "Schedule 1."

  6. IRS. "Publication 524, Credit for the Elderly or the Disabled."

  7. IRS. "IRA FAQs—Distributions (Withdrawals)."

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