If you’re eyeing retirement in 2026, get ready for some potential surprises regarding your taxes.
Several recent federal policy shifts might just open up new avenues for you to cut expenses, but there could also be hidden traps. Changes likely mean that while some individuals could decrease their tax bill, others could inadvertently raise it if they aren’t careful.
$6,000 Senior Bonus Deduction
“Starting from the 2025 tax year and running through 2028, individuals aged 65 and older can claim an extra deduction of $6,000 each, on top of the standard deduction,” explained a financial CEO. And if you’re married, that goes up to $12,000.
But, keep an eye on your modified adjusted gross income; if you’re a single filer catching above $75,000 or a couple going beyond $150,000, that deduction starts to fade away.
“If you’re 65 or older, that additional deduction is pretty significant right away,” they noted. It could help lower your taxable income in retirement—especially in years when you’re juggling withdrawals or considering Roth conversions.
Required Minimum Distribution Age Increase
The age for required minimum distributions (RMDs) recently jumped to 73, which gives seniors extra time to withdraw from their tax-deferred accounts like traditional IRAs or 401(k)s. This delay could help keep your taxable income lower in those early retirement years, a CPA pointed out.
However, it’s important to note that if you miss your RMDs, the penalty has decreased from 50% to 25%, and now Roth 401(k)s don’t require lifetime distributions from the original account holder. So, this offers a bit more flexibility regarding tax income structure.
Contributing to Super Catch-Up
Come 2025, individuals between 60 and 63 can contribute more to their retirement accounts. Instead of the typical $7,500 annual catch-up contribution, you could boost that to an additional $11,250. This could present a valuable opportunity for those at peak earning potential to catch up.
But, there’s a caveat for higher earners. If your income tops around $150,000 (adjusted for inflation), you might find that these contributions could only be made as Roth contributions, not pre-tax ones. It’s a situation worth thinking through given its implications on future taxes.
