4 Tax Perks Only Available to Retirees — and How To Claim Them
Written by
Sarah Li Cain
Edited by
Rebekah Evans
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You may not be earning an income from a job anymore now that you’re retired. But that doesn’t mean you’re not on the hook for paying taxes.
The good news is that there are several tax breaks available to retirees. Hopefully taking advantage of them will help you stretch our dollars further. Here are four common tax perks to help you lower the amount you may owe to the IRS.
Also here are six benefits for retirees filing early.
Higher Standard Deduction
Once you turn 65, the IRS offers an extra standard deduction. This is an amount set by the IRS that will reduce how much of your income is taxed. For the 2024 tax year, your standard deduction will go up by an additional $1,550 per person if you’re married. Though if you’re single and not a surviving spouse, that amount goes up to $1,950. The deduction goes up for the 2025 tax year — $1,600 for married couples and $2,000 for single filers.
You won’t be eligible if you meet any of the exceptions. This includes your spouse file separately and either one of you itemizes deductions or if you’re filing as a part of an estate or trust.
You’ll only qualify for this extra deduction if you turn 65 by the end of the tax year.
Charitable Contributions
If you make withdrawals from your Traditional IRA and donate it to a qualifying charity or nonprofit, you may be able to lower the tax you owe.
According to the IRS, this tactic is called a qualified charitable distribution (QCD). While it doesn’t lower your taxable income, the amount you donate doesn’t count towards your taxes. You will need to have made the charitable donation by December 31 of each year. For the 2024 tax year, you can only donate up to $105,000 tax free.
IRA Contributions
Yes, you or your spouse can still put money in an IRA even if you’re retired. That is, if your spouse still works, as you’ll need to have earned income to contribute to one.
Depending on the tax year, you can usually contribute up to $7,000 in a Traditional or Roth IRA. If you or your spouse isn’t working, you can open and contribute to a Spousal IRA, though you’ll need to file taxes jointly.
Contributing to a Traditional IRA could lower your taxable income now. With a Roth IRA, you pay taxes upfront, but you won’t as long as the money has sat in your account for at least five years.
Long-Term Care Expenses
Itemizing your taxes could work better to your advantage if you end up paying a lot out of pocket for medical expenses or any costs related to long-term care. Especially if it exceeds the standard deduction.
To be able to itemize, your medical and long-term care expenses need to be 7.5% or higher of your annual adjusted gross income (AGI). This amount takes into account your income minus certain adjustments like student loan interest, contributions to an IRA and self-employment taxes.
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