Your 2026 Tax Return: Key Changes Every Retiree Should Know Before Filing

Tax season is here, and this year brings several changes that directly affect retirees. Whether you file your own return or hand it off to a preparer, knowing what changed will help you avoid surprises and possibly save money.

Here is what is different on your 2026 tax return (for the 2025 tax year) and what to do about it.

The Standard Deduction Went Up

The standard deduction for 2025 (the tax year you are filing now) increased to:

Single filers: $15,000 (up from $14,600)
Married filing jointly: $30,000 (up from $29,200)
Head of household: $22,500 (up from $21,900)

If you are 65 or older, you get an additional standard deduction:

Single or head of household, age 65+: Extra $2,000
Married filing jointly, one spouse 65+: Extra $1,600
Married filing jointly, both spouses 65+: Extra $3,200

That means a married couple where both spouses are over 65 can take a standard deduction of $33,200. This is a meaningful amount that keeps many retirees from owing any federal income tax at all.

Tax Brackets Shifted

All seven federal income tax brackets adjusted upward for inflation. This means you can earn slightly more before hitting the next tax rate. Here are the 2025 brackets for single filers:

10%: Up to $11,925
12%: $11,926 to $48,475
22%: $48,476 to $103,350
24%: $103,351 to $197,300
32%: $197,301 to $250,525
35%: $250,526 to $626,350
37%: Over $626,350

For married filing jointly, each bracket is roughly double the single filer amount.

Most retirees fall in the 12% or 22% bracket. If you are close to a bracket boundary, small decisions (like the timing of an IRA withdrawal or selling an investment) can push you into a higher or lower bracket.

This is the bad news that comes back every year. The income thresholds that determine whether your Social Security benefits are taxed have not been updated since 1993. They are:

Single filers: Benefits become partially taxable at $25,000 of combined income; up to 85% taxable at $34,000
Joint filers: Partially taxable at $32,000; up to 85% taxable at $44,000

“Combined income” means your adjusted gross income, plus nontaxable interest, plus half of your Social Security benefits.

Because these thresholds never adjust for inflation, more retirees cross them every year. If your pension, IRA withdrawals, or investment income pushes you above these lines, a portion of your Social Security becomes taxable.

RMD Changes Under SECURE 2.0

The SECURE 2.0 Act continues to phase in changes to Required Minimum Distributions (RMDs). For 2025:

If you turned 73 in 2025, you must take your first RMD by April 1, 2026
If you are already taking RMDs, your 2025 distribution must have been taken by December 31, 2025
Roth 401(k) accounts are no longer subject to RMDs (this change took effect in 2024)

If you missed a 2025 RMD, the penalty is 25% of the amount you should have withdrawn. That drops to 10% if you correct it within two years. Either way, it is a costly mistake. Check with your financial institution to confirm your distributions were taken.

The 1099-R Form: Read It Carefully

If you took distributions from a retirement account, you received a Form 1099-R. Check it for accuracy, especially:

Box 1 (Gross distribution): The total amount withdrawn
Box 2a (Taxable amount): The portion subject to income tax
Box 4 (Federal tax withheld): What was already sent to the IRS on your behalf
Box 7 (Distribution code): This tells the IRS why you took the money. Code 7 means a normal distribution after age 59 1/2.

If you did a Roth conversion, you should see code 2 or 7 along with a taxable amount in Box 2a. Make sure this matches your records.

Health Savings Account (HSA) Benefits for Medicare Enrollees

Once you enroll in Medicare, you can no longer contribute to a Health Savings Account. But if you have money in an existing HSA, you can still use it tax-free for qualified medical expenses, including:

Medicare premiums (Parts B and D, but not Medigap)
Prescription copays
Dental and vision expenses
Long-term care insurance premiums (up to age-based limits)

There is no deadline to use HSA funds. They roll over indefinitely. If you have an HSA balance, this is one of the most tax-efficient ways to pay for healthcare in retirement.

Capital Gains Rates for 2025

If you sold stocks, bonds, mutual funds, or real estate in 2025, you may owe capital gains tax. The long-term capital gains rates (for assets held more than one year) are:

0%: Taxable income up to $48,350 (single) or $96,700 (joint)
15%: Taxable income up to $533,400 (single) or $600,050 (joint)
20%: Above those amounts

Many retirees with moderate income qualify for the 0% rate on long-term gains. This is worth checking if you sold investments last year. Tax-loss harvesting (selling losing investments to offset gains) could also reduce your bill, but only if you did it before December 31.

Free Filing Help for Seniors

You do not have to pay for tax preparation. The IRS offers several free options:

VITA (Volunteer Income Tax Assistance): Free tax prep for people who earn $67,000 or less. Many VITA sites specialize in serving seniors. Find a site at irs.gov/vita or call 1-800-906-9887.

TCE (Tax Counseling for the Elderly): Run by AARP Foundation Tax-Aide, this program focuses specifically on retirees. Volunteers are trained on pension income, Social Security taxation, and retirement account distributions. Find a location at aarpfoundation.org/taxaide.

IRS Free File: If your adjusted gross income is $84,000 or less, you can file electronically for free through IRS-approved software at irs.gov/freefile.

Common Mistakes to Avoid

Forgetting state taxes. Federal taxes are only part of the picture. Some states tax Social Security benefits, some do not. Some states exempt pension income. Check your state’s rules.

Missing the April 15 deadline. The filing deadline for your 2025 return is April 15, 2026. If you need more time, file Form 4868 for an automatic six-month extension. But remember: an extension to file is not an extension to pay. Estimate what you owe and send payment by April 15 to avoid interest and penalties.

Not reporting all income. The IRS receives copies of all your 1099s and W-2s. If you forget to include one, the IRS will send a notice. Report every source of income, even small ones.

Overlooking deductions. If you itemize instead of taking the standard deduction, do not forget medical expenses above 7.5% of your adjusted gross income, charitable contributions, and state and local taxes (up to $10,000).

What to Do This Week

Gather all your tax documents: W-2s, 1099s (1099-R, 1099-SSA, 1099-INT, 1099-DIV, 1099-B), property tax statements, and charitable receipts
Compare your standard deduction to your potential itemized deductions to see which gives you a bigger tax break
If you had a life change in 2025 (spouse passed away, sold a home, started RMDs), consider consulting a tax professional
Book a VITA or TCE appointment now. Slots fill up fast in February and March.

Tax law changes every year, but the basics stay the same: know your income, claim every deduction you are entitled to, and file on time. A little preparation now can save you money and stress.

Reported by Robert A. Williams with additional research from the SeniorDaily editorial team. For corrections or updates, please contact us.