Senior Deduction, Personal Exemptions, and Miscellaneous Itemized Deductions

The One Big Beautiful Bill Act (OBBBA) did more than extend lower tax rates and expand selected deductions. It also reshaped several long-familiar concepts that still cause confusion in year-end planning discussions: personal exemptions, the new senior deduction, and the continued suspension of most miscellaneous itemized deductions.

For 2025, these rules create a mix of permanence and temporary relief. Some deductions that taxpayers remember from earlier years are still gone, while a new benefit for older taxpayers adds a planning opportunity through 2028.

Personal Exemptions: Still Effectively Gone

Many taxpayers still ask whether they can claim personal exemptions for themselves, a spouse, or dependents. For federal income tax purposes, the answer is generally no.

Although 26 U.S.C. § 151 still contains the personal exemption framework, it provides that for taxable years beginning after December 31, 2017, the exemption amount is zero. In practical terms, that means the deduction remains in the Code structure, but it does not currently produce a federal deduction amount for most taxpayers. 26 U.S.C. § 151(d)(5)

That is why post-TCJA and post-OBBBA planning focuses much more on:

• filing status,

• the standard deduction,

• child-related credits,

• dependent credits, and

• other targeted deductions,

rather than personal exemptions themselves.

The Thomson Reuters 2025 Year-End Tax Planning Guide summarizes this point directly: personal exemptions are permanently eliminated for most taxpayers.

New Temporary Senior Deduction for 2025 Through 2028

While personal exemptions remain unavailable in practical terms, OBBBA added a new temporary deduction for certain older taxpayers.

Under 26 U.S.C. § 151(d)(5)(C), for taxable years beginning before January 1, 2029, there is a $6,000 deduction for each qualified individual. A qualified individual generally includes:

• the taxpayer, if age 65 or older by year-end; and

• on a joint return, the spouse, if age 65 or older by year-end. 26 U.S.C. § 151(d)(5)(C)(ii)

  
  

Key features of the senior deduction

• Amount: $6,000 per qualified individual.

• Availability period: tax years 2025 through 2028.

• Joint returns: potentially $12,000 if both spouses qualify by age.

• SSN required: the return must include the qualified individual’s Social Security number. 26 U.S.C. § 151(d)(5)(C)(iv)

• Married taxpayers: if married within the meaning of 26 U.S.C. § 7703, the deduction generally applies only if the spouses file a joint return. 26 U.S.C. § 151(d)(5)(C)(v)

Income-based phaseout

The deduction is reduced by 6% of modified adjusted gross income over:

• $75,000 for most taxpayers, or

• $150,000 for joint returns. 26 U.S.C. § 151(d)(5)(C)(iii)

Modified AGI for this purpose includes AGI plus certain excluded foreign income amounts. 26 U.S.C. § 151(d)(5)(C)(iii)(II)

Why this matters for planning

This deduction can be meaningful even for taxpayers who do not itemize. It creates a separate deduction opportunity tied to age, subject to income limits and filing status rules, and may affect:

• withholding and estimated tax projections,

• Roth conversion analysis,

• charitable bunching strategies,

• IRA distribution timing, and

• joint-versus-separate filing comparisons for older married couples.

How the Senior Deduction Interacts with the Standard Deduction

Taxpayers age 65 or older are already familiar with the additional standard deduction rules under 26 U.S.C. § 63(f). OBBBA’s senior deduction is in addition to that familiar age-based standard deduction concept, not merely a relabeling of it.

That distinction matters. The age-based increase under 26 U.S.C. § 63(f) remains part of the standard deduction framework, while the new temporary senior deduction under 26 U.S.C. § 151(d)(5)(C) is a separate provision with its own income limitations, Social Security number rules, and joint-return requirements.

In short, for qualifying taxpayers, 2025 may include:

• the regular standard deduction,

• the additional age-based standard deduction, and

• the temporary OBBBA senior deduction.

Miscellaneous Itemized Deductions: Still Suspended

Another area that continues to generate confusion is the treatment of miscellaneous itemized deductions.

The miscellaneous itemized deductions remain suspended, except for limited unreimbursed educator expenses. That means many deductions taxpayers used to discuss before 2018 generally remain unavailable for federal purposes, including categories historically subject to the 2%-of-AGI floor.

Examples commonly associated with the suspended category have included items such as:

• unreimbursed employee business expenses,

• tax preparation fees,

• investment advisory fees, and

• certain other expenses formerly claimed as miscellaneous itemized deductions.

For 2025 planning, the practical point is straightforward: taxpayers generally should not assume these expenses will create a federal itemized deduction benefit.

Planning Takeaways for 2025

These three rules work together in important ways.

1. Do not build projections around personal exemptions

For most federal returns, personal exemptions remain functionally unavailable because the exemption amount is zero under 26 U.S.C. § 151(d)(5)(A).

2. Check senior eligibility carefully

For taxpayers age 65 or older, the temporary senior deduction may be valuable, but the rules require attention to:

• age by year-end,

• filing status,

• MAGI thresholds,

• SSN reporting, and

• whether a married taxpayer is filing jointly.

3. Revisit deduction assumptions for retirees and high-income taxpayers

Some clients may remember older deduction categories that no longer exist federally. That makes return projections, estimated payments, and year-end planning conversations especially important in 2025.

4. Coordinate federal and state analysis

Even if a deduction is suspended or reduced for federal purposes, state treatment may differ. State conformity should be reviewed separately before assuming the same result applies across jurisdictions.

Bottom Line

For 2025, personal exemptions remain largely unavailable, miscellaneous itemized deductions generally remain suspended, and the most meaningful new relief in this area is the temporary senior deduction available through 2028.

That makes this an important year to reset expectations. Taxpayers who are still thinking in pre-TCJA terms may miss planning opportunities or overestimate deductions that no longer exist. At the same time, older taxpayers who qualify for the new deduction may have a meaningful opportunity to reduce taxable income if they plan proactively.