8 Big Tax Breaks for Retirees

Higher filing threshold

Older people can earn a bit more income than younger workers before they have to file a federal return. You may not be retired yet, but if you’re at least 65, several thousand extra dollars of income can go untaxed.

Individuals who were under 65 at the end of 2025 must file a federal return this year if their income last year was at least $15,750 for single filers, $23,625 for taxpayers filing as head of household, or $31,500 for married couples filing jointly or a qualifying surviving spouse.

Once you cross that age milestone, though, you can collect more income before you’re required to file a return.

For individuals who were 65 or older at the end of 2025, the threshold for having to file a return is gross income of at least $17,750 for a single filer; $25,625 for a head of household; $34,700 for a married couple filing jointly when both spouses are 65 or older; and $33,100 if only one spouse is 65-plus.

Itemizing long-term care expenses

If you incurred hefty medical or insurance expenses related to long-term care in 2025, itemizing on your return instead of taking the standard deduction can produce a significant tax advantage.

To take advantage of this deduction, your total medical and insurance expenses must amount to at least 7.5 percent of your adjusted gross income (AGI) for the year. AGI is the sum of your wages, retirement income, dividends, capital gains and other taxable income, minus adjustments such as self-employment taxes, student loan interest and contributions to a traditional individual retirement account (IRA).

The numbers can run well over the standard deduction. HHS estimates that an American turning 65 in 2025 will incur $120,900 in future long-term services and support costs over their lifetime. Average annual costs in 2024 ranged from $26,000 for adult day care to $127,750 for a private room in a nursing home, according to data from insurer Genworth. 

You may also be able to deduct the cost of long-term care insurance premiums, but the deductible amount depends on your age. The following chart shows how much of your long-term care insurance premiums you can deduct for the 2025 tax year. 

Other qualified medical and dental expenses may also be deductible if you itemize, such as hospital, nursing home and rehabilitation care, prescription drugs, false teeth, wheelchairs and weight loss and nutrition programs.

Spousal IRA

Older taxpayers can kick extra dollars into a traditional IRA or Roth IRA. But there’s only one way to do that if you’re fully retired, and only one of the accounts yields a tax deduction.

To contribute to a traditional or Roth IRA, you generally have to have earned income from work. But there’s a loophole: A nonworking spouse can open and contribute to either type of IRA, provided that the other spouse is working and the couple files a joint return.

Traditional IRAs can be funded with either pretax or post-tax dollars. Only pretax contributions are deductible. With pretax accounts, the money grows tax-deferred and you pay ordinary income tax rates on withdrawals, which you have to start making once you reach age 73 (age 75 if you were born after 1959). With post-tax traditional IRAs, you must carefully document your contributions to avoid paying tax on withdrawals.

Roth IRAs are funded with after-tax dollars, so come tax time there’s no deduction for contributions — but you can make tax-free withdrawals of those contributions at any time, and earnings on the account are tax-free once you hit age 59½ and have had a Roth IRA for at least five years. Unlike traditional IRAs, Roth IRAs generally don’t have required minimum distributions (RMDs), even if you are older than 73, unless you inherited the account from someone other than a spouse.

For the 2025 tax year, the IRA contribution limit for those age 50 and older is $7,000, plus a $1,000 catch-up amount for a total of $8,000. Taxpayers have until this year’s April 15 filing deadline to make contributions for 2025, meaning a nonworking spouse (either retired or stay-at-home) with an account still has time to make contributions and claim the tax deduction.

Credit for the elderly or the disabled

This tax break lets individuals and couples with very low income reduce the amount of income tax they owe. To qualify, you must be 65 or older by the end of 2025, or be retired on permanent and total disability and receiving taxable disability income. Also, your income cannot be greater than two separate amounts — one based on your AGI, and one based on your nontaxable Social Security, pension, annuity or disability income.

The credit, which ranges from a maximum of $3,750 to $7,500, reduces a tax bill dollar for dollar. It’s nonrefundable, meaning that if it exceeds the amount of tax you owe, you don’t get the remainder as a cash refund.

HSA contributions

The tax beauty of a health savings account, or HSA, is threefold.

Contributions are made with pretax dollars, which reduces your AGI and thus the taxes you owe. That means an HSA can put a person with steep medical costs closer to the 7.5-percent-of-AGI threshold needed to itemize medical costs not paid through the HSA. As long as the account’s funds are used for approved health care expenses, withdrawals are tax-free. You may be able to invest some HSA funds in stocks, mutual funds or exchange-traded funds, and the gains they notch over time are also tax-free. It’s a three-bagger come tax time.

As with IRAs, you have until April 15 to make a contribution to an HSA. For tax year 2025, you can kick in up to $4,300 if you're covered under a “self-only” health plan; for family plans, the limit is $8,550. People 55 and older can throw in an extra $1,000.

But there are a few catches. The accounts are available only through health insurance plans sponsored by employers or purchased through the Affordable Care Act marketplace, and you have to be enrolled in a high-deductible health plan to contribute to an HSA. In 2025, that means a minimum deductible of $1,650 for self-only plans and $3,300 for family plans, and a maximum out-of-pocket limit of $8,300 for self-only coverage and $16,600 for family coverage. Half of all private industry workers with a medical plan were covered under a high-deductible plan in 2024, according to the Bureau of Labor Statistics.

Charitable donations

Distributing funds from a traditional IRA to a charity recognized by the IRS offers a couple of tax benefits.

First, a qualified charitable distribution (QCD) counts toward the RMDs that set in once you turn 73, if you have a traditional IRA. Second, it lowers your taxable income, potentially reducing the taxes owed on Social Security benefits and Medicare surcharges, which could keep you out of a higher tax bracket. QCDs can start at age 70½.

However, there’s fine print. In tax terms, a QCD is an exclusion — meaning an item on which you don’t pay taxes — and not a deduction, which is an item that reduces the total income on which you pay tax. Also, for a QCD to count toward your RMD, the money must come out of your IRA by the RMD deadline, which is typically Dec. 31. Taxpayers can move up to $108,000 for tax-free charitable giving for 2025.

While you can make a QCD from a Roth IRA, there’s no additional tax benefit to doing so, as the accounts are already exempt from tax and your distributions aren’t deductible.

Some nonprofits, including private foundations and donor-advised funds, don’t qualify for QCDs. But you can use QCDs to fund a charitable remainder unitrust, charitable remainder annuity trust or charitable gift annuity, up to a maximum one-time donation of $54,000 for tax year 2025.

Need help with your tax return? Try AARP’s tax calculator, or visit AARP Foundation Tax-Aide to learn about free tax prep services by 30,000 volunteers nationwide.