The OBBBA includes some targeted benefits for seniors and expands education-related tax advantages that could benefit multiple generations.
Extra Deduction for Seniors
If you’re 65 or older, you get a new tax break on top of the existing additional standard deduction for seniors.
The new senior deduction:
- $6,000 for single filers
- $12,000 for married filing jointly
- Available whether you itemize or take the standard deduction
Income limits:
- Phases out when Modified Adjusted Gross Income exceeds $75,000 (single) or $150,000 (married filing jointly)
- This is temporary through 2028
529 College Savings Plans Get Better
These popular education savings accounts just became more flexible:
For K-12 expenses:
- Annual limit increases from $10,000 to $20,000 for elementary and secondary school
- Broader definition of qualifying K-12 expenses
- Effective for tax years starting after December 31, 2025
New qualified expenses:
- Postsecondary credentialing and certification programs now qualify
- Effective for distributions after July 4, 2025
New Scholarship Tax Credit (Starting 2027)
Here’s an interesting new option for charitable giving:
How it works:
- Make cash donations to qualified scholarship granting organizations (SGOs)
- Get a dollar-for-dollar tax credit up to $1,700
- Available to all taxpayers, regardless of whether you itemize
- Must be a U.S. citizen or resident
The trade-off: You can’t also claim these donations as charitable deductions, but a credit is usually better than a deduction anyway.
For students: Scholarships funded by these donations aren’t taxable income to the recipient.
Making These Work for You
The senior deduction phases out at relatively modest income levels for many retirees. If you’re approaching those thresholds, we might want to discuss timing strategies like Roth conversions or managing when you recognize investment gains and losses.
The enhanced 529 benefits make these accounts even more attractive for families thinking about multi-generational education planning. Grandparents can now fund both K-12 and college expenses more generously.
The scholarship tax credit starting in 2027 gives you a new way to think about charitable giving – especially if you’re already supporting educational causes. Since it’s a credit rather than a deduction, it often provides better tax savings.
