Personal Exemptions Gone Plus $6,000 New Deduction

The Changes

Personal exemptions are gone! First and foremost, the law permanently eliminates personal exemptions. Without the change, exemptions were scheduled to be reintroduced in 2026.

New senior benefit. But the law also introduces a new senior deduction of $6,000 per individual with these requirements:

• You must be 65 years or older during the tax year.
• The $6,000 benefit is only available for years 2025 thru 2028.
• It is per taxpayer, but if married you must file a joint tax return.
• You must have a valid Social Security Number.
• The benefit phases out when your modified adjusted gross income exceeds $75,000 (single) or $150,000 (married couples, assuming both are 65 or older during the tax year).
• The $6,000 is reduced by 6% of the excess over this amount. This makes the phaseout ranges:
  • Single: $75,000 to $175,000
  • Joint filers: $150,000 to $350,000

Example: Mickey and Minnie Mouse, both 96 years old, file a joint tax return and have $200,000 in modified adjusted gross income. Their new senior exemption will be $9,000. It is reduced by $3,000 [6% times ($200,000 - $150,000)].

Tips You Can Use

• Get the word out. Everyone knows someone who will receive this benefit. So inform anyone who may be impacted by this new deduction.
• Planning occurs now. If you're over 65 and working, know this new deduction and its phaseouts. Consider the following:
  • Work fewer hours if you think you'll be approaching the phaseout
  • Understand what the IRS means by modified adjusted gross income. A link is provided here.
  • Consider adjusting your withholdings if appropriate for your situation.
• Social Security is taxable. Remember, your Social Security benefits are still subject to federal income tax. Earlier press about excluding this income from tax is not law.
• Other standard deductions still apply. This $6,000 senior deduction is IN ADDITION to your standard deduction, including the normal age-related deductions and benefits. It does not replace any of them.

There are a lot of details in OBBBA that impact you or someone you know. With a quick review you can see if you will need some assistance. When this happens, call for help.

Source: OBBBA 2025, SEC. 70103