4 Of The Best Tax Breaks After 50 (You May Not Realize You Can Get)

Between 2010 and 2023, the number of retired Americans accessing Social Security increased by 15.56 million, going from 34.59 million in 2010 to 50.1 million 13 years later, according to Statista. This rapid increase means the current workforce supporting that group with their tax dollars will be smaller than ever before, putting an increased burden on the government and leading to questions about what the future of Social Security in the United States will look like for younger generations. In fact, the nonprofit Alliance for Lifetime Income reports ~4.1 million Americans will retire each year through 2027, or 11,200 seniors every day.

With questions about the stability of Social Security, the rising cost of living, and what'll be left on the table for the next cohort of retirees, your retirement plan should also include taking advantage of as many tax breaks as you can after you retire. With the National Council on Aging finding that 17 million seniors over the age of 65 receive incomes 200% below the federal poverty level, knowing what tax deductions you can use to your advantage seems even more necessary. The good news is you don't have to wait until you're 65 to take advantage of some of these breaks — you can already start some at 50.

One tax break to consider when older is the higher contribution you can make to a tax-advantaged health savings account, or HSA. Once you turn 55, the IRS lets you contribute a higher amount via catch-up contributions. In 2024, for example, individuals can contribute $4,150 to an HSA, while those 55 and older can contribute $1,000 more for a total of $5,150.

Families, meanwhile, may contribute as much as $8,300 in 2024 (and $8,550 in 2025). Either way, maxing out your HSA contributions today not only gives you additional health care coverage in your retirement years, but it also offers an alternate tax-deductible and tax-free way to access cash during retirement if you need it. Note that your allowable HSA contributions can be reduced based on how much your employer contributes to your plan.

Further, if you launch a business after you retire, you can deduct premiums from Part B and D Medicare, including Medigap and Medicare Advantage plans, so long as you aren't on an employer- subsidized plan.

If you want more in the way of tax benefits when you're over 65, then you need to start thinking about how to reduce your tax bill. Remember that your adjusted gross income, or AGI, is your total income minus deductions. Taxpayers each year have the choice to either itemize deductions or take the standard deduction, whichever one is greater. For those 65 and older, it's usually the standard deduction.

If 65 years of age or older, you can claim an additional $1,950 for 2024 if filing as an individual. Married taxpayers filing jointly or separately can claim a bonus $1,550 for each qualified person. If you're 65 or older and blind, the higher standard deduction grows to $3,900. For married couples filing jointly or separately, where one or both partners are 65 or older and blind, the deduction is $3,100 per qualified person.

A money tip for married couples is to make use of spousal IRA contributions. A spousal IRA is an IRA a working partner establishes for their non-working partner. As of 2024, the working spouse is allowed to contribute up to $7,000 to their spouse's IRA so long as they've made enough income to contribute to their own and their spouse's. One rule is that the IRA contributions cannot exceed the taxable earned income you'll report on your joint tax return.

Further, an additional $1,000 can be contributed for account holders who are older than 50. So, for 2024, a married couple with both an IRA and spousal IRA can contribute a maximum of $14,000 if (both partners are) younger than 50 and $16,000 if both are over 50 years of age. As you can see, a spousal IRA can literally double what a couple could save each year for their retirement, and it's all tax-advantaged.

One of the most important tax breaks you need to know about is in relation to your property. While property taxes are usually dictated by states and counties, there are some states that offer exemptions for homeowners over 65 years of age. In fact a few states, like Washington, allow for the exemption as early as age 61.

There are currently a dozen states that offer some form of property tax break for seniors — called a homestead exemption — that lowers the tax you pay on your home by freezing the assessed value of your property and taxing it at the level for as long as you own it, even as the true value of the home continues to appreciate. These states are Alabama, Alaska, Florida, Georgia, Hawaii, Mississippi, New Hampshire, New York, South Carolina, South Dakota, Texas, and Washington.

Keep in mind this tax exemption is different from state to state, with some regions allowing for an exemption for a portion of the home's market value. Also, for couples, only one of you may need to qualify. Further, this tax break is available for different types of homes, including condominiums, townhomes, mobile homes, and even houseboats, depending on your state's rules.