Retirees 65 and Older Eligible for Extra Standard Deduction at Tax Time — When It’s Right for Your Budget

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The new year is a great time to restore your finances. For many Americans, holiday downtime is the right time to set new spending and saving goals, review budgets and establish retirement accounts and emergency funds.

Be that as it may, planning for a financially healthy 2024 also means looking back at 2023, especially when the time comes to file your income tax return.

Fortunately, unless you have multiple income streams or hold an especially complicated investment portfolio, filling out tax forms has become easier with each passing year. An estimated 90% of American taxpayers use the standard deduction instead of itemizing deductions on their 1040s, per USA Today.

However, if you are 65 or older on the last day of the year and don’t itemize deductions, or if you are blind, you’re entitled to additional deductions on top of the regular standard deduction amounts.

The IRS considers an individual to be 65 on the day before your 65th birthday. So when claiming your standard deduction for 2023, you can take a higher standard deduction amount if you were born before Jan. 2, 1959.

Additional Standard Deductions for Age and Blindness

The standard deduction reduces a taxpayer’s taxable income, ensuring that only households with income above certain thresholds will owe income tax. The standard deduction amounts for 2023 are $27,700 if you’re married filing jointly (an increase of $1,800 from 2022), $20,800 for heads of households (a $1,400 gain) and $13,850 for single filers or those married filing separately (up $900, from $12,950).

For tax year 2023, the additional standard deduction amounts for taxpayers who are 65 and older OR blind are:

• $1,850 for single or head of household.
• $1,500 for married taxpayers (per qualifying person) or qualifying surviving spouse. A married couple of two 65+ adults would take a total deduction of $27,700 (standard deduction) plus $1,500 for one 65+ adult plus $1,500 for second 65+ adult — a total of $30,700.

If you are 65 or older AND blind, the extra standard deduction is:

• $3,700 if you are single or filing as head of household.
• $3,000 per qualifying individual if you are married, filing jointly or separately.

While many Americans choose the easier standard deduction route when completing their tax returns, every taxpayer is different. After crunching tax figures, you might realize that you’ll save more money by itemizing your deductions. As USA today noted, electing to itemize or not will depend on whether the total of your itemized deductions is greater than your designated standard deduction.

It may make more sense and save you money to itemize your deductions, but you’ll miss out on any eligible additional standard deductions. And bear in mind that that the IRS excludes certain taxpayers from using the standard deduction at all. You have to itemize your tax deductions:

• If you are a married individual filing as married filing separately whose spouse itemizes deductions.
• If you are an individual who was a nonresident alien or dual status alien during the year (check IRS tax Topic No. 551 for exceptions).
• If you are an individual who files a return for a period of less than 12 months due to a change in your annual accounting period.
• If you are filing as an estate or trust, common trust fund or partnership.

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