Retirees Catching Some Big Tax Breaks in 2025

November 30, 2025 — The federal tax bill that comes into effect for 2025 has some very big tax breaks that are probably coming your own. These, and particularly the even bigger tax cuts for the ultra rich, are helping to send the country into insolvency, but at least you will probably enjoy a lower tax bill this April 15.

The AARP has an excellent summary article of the 2025 tax changes embedded in the OBBB. Rather than discuss them in greater detail, we will just briefly summarize them by category. Check out the AARP article for fuller discussion.

Standard Deduction. Now set at $30,000, up from $29,500. People over 65 get an additional $1500.

Over 65. A couple over 65 gets $12,000 deduction, depending on MAGI income limits. The extra phases out after $1500 in Modified Adjusted Gross Income.

Higher SALT deduction. The deduction for State and Local Taxes doubles from $10,000 per person to $20,000 ($40,000 for married couples filing jointly). It phases out when MAGI goes over $500,000 (couples).

Car loan interest. Certain (smaller) cars finished in the U.S. can get up to $10,000 in interest deducted with MAGI adjustment).

Larger catch up 401(k) contributions. Savers who are 60-63 get a larger catch up 401(k) contributions. Savers who are 60-63 of up to $34,750.

Tipped workers. Workers in certain traditional tipped workers categories can deduct up to $25,000 in cash tips, with a MAGI adjustment over $300,000 (joint filers).

Overtime pay. Those who receive overtime pay can deduct up to $25,000 (joint) of it, with MAGI adjustment.

Comments? What will you do with the extra cash you will very likely receive as an IRS refund? Just help ends meet, or take a trip somewhere?