Tax deductions for retirees start with a bigger standard deduction at age 65 and extend into medical expenses, charitable giving straight from an IRA, a large exclusion on the sale of a home, capital loss write-offs, and a handful of narrower credits and deductions tied to how you spend your retirement years. Which ones actually save you money depends on your income mix, whether you itemize, and how your deductions interact with the taxable portion of your Social Security benefits.
The Bigger Standard Deduction at 65
Once you turn 65, federal law adds an extra amount to your standard deduction. For the 2026 tax year, the basic standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 On top of that, single filers and heads of household who are 65 or older add $2,050. Each qualifying spouse on a joint return adds $1,650, so a couple where both spouses are 65 or older picks up an additional $3,300.
If you’re also legally blind at year-end, you get the same extra amount a second time, and the two increases stack.2Office of the Law Revision Counsel. 26 USC 63 – Taxable Income Defined You claim these by checking the appropriate boxes on Form 1040 or 1040-SR.3Internal Revenue Service. Topic No. 551, Standard Deduction
This matters for a practical reason. The bigger the standard deduction, the harder it is for itemizing to beat it. Many retirees who itemized during their working years find that once they cross 65, the standard deduction wins unless medical bills, charitable gifts, or property taxes push their itemized total well past it.
Medical, Dental, and Long-Term Care Expenses
Healthcare tends to be the largest expense category in retirement, and unreimbursed medical and dental expenses are deductible to the extent they exceed 7.5% of your adjusted gross income.4Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses You have to itemize to take the deduction, so it only helps once your combined itemized amounts beat the standard deduction. In a year with major medical costs, that’s often achievable.
Qualifying costs include doctor and dentist visits, hospital stays, prescription drugs, hearing aids, dentures, walkers, oxygen equipment, and transportation to medical appointments. Medicare Part B and Part D premiums also count, and those alone can run into the thousands each year.5Internal Revenue Service. Publication 502, Medical and Dental Expenses
Long-Term Care Insurance Premiums
Premiums on qualified long-term care insurance are deductible as medical expenses up to an age-based annual cap. For 2026:
- Age 50 or younger: up to $500
- Age 51 to 60: up to $1,860
- Age 61 to 70: up to $4,960
- Over age 70: up to $6,200
These amounts still have to clear the 7.5% AGI floor with your other medical costs before they produce any tax benefit. For retirees paying substantial long-term care premiums, they can be the item that makes itemizing worthwhile.
Nursing Home and In-Home Care
Nursing home fees qualify when the main reason for the stay is medical care rather than personal convenience. If a facility provides both medical care and personal assistance, only the medical portion is deductible. In-home nursing services ordered by a physician also qualify. Keep detailed records showing both the amount paid and the medical purpose; the IRS can ask for documentation.
Charitable Giving, Including Straight From an IRA
Cash and property donations to qualified charities are deductible if you itemize.6Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts For any cash gift, you need a bank statement, canceled check, or receipt. Donations of $250 or more require a written acknowledgment from the charity describing the gift and whether you received anything in return.7Internal Revenue Service. Substantiating Charitable Contributions
Non-cash gifts like clothing or household items are generally deductible at fair market value. A single non-cash donation above $500 requires Form 8283, and property valued above $5,000 requires a qualified independent appraisal.8Internal Revenue Service. Instructions for Form 8283 – Noncash Charitable Contributions
The Qualified Charitable Distribution
If you’re 70½ or older, a qualified charitable distribution lets you send money directly from your traditional IRA to an eligible charity without counting the transfer as taxable income. The 2026 cap is $111,000 per person, so a married couple with IRAs on both sides can give up to $222,000.9Congressional Research Service. Qualified Charitable Distributions From Individual Retirement Arrangements The distribution also counts toward your required minimum distribution for the year.10Internal Revenue Service. Seniors Can Reduce Their Tax Burden by Donating to Charity Through Their IRA
This is often the better path for retirees who take the standard deduction. A regular charitable deduction only helps if you itemize and your total deductions beat the standard amount. A QCD lowers your adjusted gross income directly, which can reduce the taxable portion of your Social Security benefits, hold down Medicare premium surcharges, and keep you under other income-based thresholds.
Selling Your Home
Selling a home is one of the biggest financial events in retirement, and the tax code offers a large exclusion. If you owned and lived in the home as your primary residence for at least two of the five years before the sale, you can exclude up to $250,000 of gain from income. Married couples filing jointly can exclude up to $500,000 when both spouses meet the use test.11Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence
A surviving spouse who sells within two years of their spouse’s death can still claim the full $500,000 exclusion, either on a joint return filed for the year of death or through a special rule that applies the higher limit to the surviving spouse’s individual return. You can only use the exclusion once every two years. Track your cost basis carefully, particularly for home improvements made over decades that increase it. Gain above the exclusion is taxed as capital gain.12Internal Revenue Service. Topic No. 701, Sale of Your Home
Capital Losses on Investments
When you sell investments at a loss, those losses first offset any capital gains you realized during the year. If losses exceed gains, you can deduct up to $3,000 of the excess against ordinary income ($1,500 if married filing separately).13Office of the Law Revision Counsel. 26 U.S. Code 1211 – Limitation on Capital Losses Any remaining loss carries forward into future years until it’s fully used.14Office of the Law Revision Counsel. 26 USC 1212 – Capital Loss Carrybacks and Carryovers
Watch the Wash Sale Rule
If you sell a security at a loss and buy back the same or a substantially identical one within 30 days before or after the sale, the loss is disallowed for the current year.15Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities The disallowed amount gets added to the cost basis of the replacement shares, so the benefit isn’t gone forever, but it’s postponed. Retirees doing year-end tax-loss harvesting need to watch that 61-day window. A different fund tracking a different index is fine; buying back essentially the same position is not.
IRA Contributions If You Still Earn Income
Retirees with part-time work, consulting income, or freelance earnings can keep contributing to a traditional IRA and may be able to deduct the contribution. The 2026 IRA contribution limit is $7,500, plus a $1,100 catch-up if you’re 50 or older, for a total of $8,600.16Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Only earned income qualifies. Social Security, pension payments, and investment income don’t count.
Whether your contribution is fully deductible, partially deductible, or nondeductible depends on your income and whether you or your spouse is covered by an employer retirement plan.17Office of the Law Revision Counsel. 26 USC 219 – Retirement Savings Contributing more than the annual limit triggers a 6% excise tax on the excess every year it stays in the account.
Spousal IRA Contributions
If one spouse has stopped working but the other still earns income, the working spouse’s earnings can support IRA contributions for both. Under the spousal IRA rules, the non-working spouse can contribute up to the full annual limit as long as the couple files jointly and the working spouse earns enough to cover both contributions. The non-working spouse owns the account outright.
Credit for the Elderly or Disabled
There’s a small credit for taxpayers 65 or older, and for those under 65 who retired on permanent and total disability. The credit ranges from $3,750 to $7,500 depending on filing status, but income phase-outs are low.18Internal Revenue Service. Credit for the Elderly or the Disabled Single filers with AGI at or above $17,500, or with nontaxable Social Security and pension income at or above $5,000, can’t claim it. For a joint return where both spouses qualify, the AGI ceiling is $25,000 and the nontaxable income limit is $7,500.19Internal Revenue Service. Publication 524, Credit for the Elderly or the Disabled
Most retirees earn too much to qualify, which is why the credit gets little attention. For those with very modest income, particularly retirees receiving little or no Social Security, it’s worth running the numbers on Schedule R. Unlike a deduction, this one reduces your tax bill directly.
Qualified Business Income for Consulting or Freelance Work
Retirees who take on consulting, freelance, or part-time self-employment may qualify for the qualified business income deduction. Eligible taxpayers can deduct up to 20% of net business income from a sole proprietorship, partnership, or S corporation.20Office of the Law Revision Counsel. 26 USC 199A – Qualified Business Income It’s calculated separately from Schedule A, so you can take it even if you use the standard deduction.
The full 20% is available below certain taxable income thresholds, with phase-outs and additional restrictions for higher earners and certain service businesses. It doesn’t reduce self-employment tax, so you still owe the full Social Security and Medicare portion on your net earnings.
How These Deductions Interact With Social Security
Any strategy for lowering your retirement tax bill has to account for how Social Security is taxed. The IRS uses a figure called combined income, which is your adjusted gross income plus any nontaxable interest plus half of your Social Security benefits. For single filers, combined income between $25,000 and $34,000 makes up to 50% of benefits taxable; above $34,000, up to 85% becomes taxable. For joint filers, the thresholds are $32,000 and $44,000.21Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits Married filing separately while living with your spouse drops the base to zero, and up to 85% of benefits are taxable regardless of income.
The practical takeaway: deductions that reduce AGI, such as deductible IRA contributions and qualified charitable distributions, do double duty. They lower taxable income and can also shrink the portion of Social Security that gets taxed. Below-the-line deductions like itemized medical expenses don’t shrink AGI, so they help less with the Social Security calculation even though they still reduce your final tax.
Required minimum distributions work the other direction. Starting at age 73, withdrawals from traditional IRAs, 401(k)s, and most other tax-deferred accounts are taxed as ordinary income and can push more of your Social Security into the taxable zone.22Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) Using a QCD to satisfy part or all of your RMD is one of the few ways to blunt that effect. Roth IRAs, by contrast, aren’t subject to lifetime RMDs for the original owner, which is why some retirees convert traditional balances to Roth in earlier retirement years to reduce future forced income.