Seniors will have the opportunity to put more money in their pockets this tax season.
In addition to the 2.8 percent cost of living adjustment for this year, senior citizens now qualify for a $6000 tax credit on top of the standard deduction thanks to the One Big Beautiful Bill Act. But these new benefits will be mitigated by a Medicare Part B premium increase.
According to the IRS, the new deduction applies to eligible individuals 65 years old and up; that means married couples filing jointly qualify for a $12,000 deduction if both spouses are eligible. All a recipient needs to do to qualify is be 65 or older by the end of the taxable year. It also comes on top of the standard deduction, which is set at $15,750 for individuals and $31,500 for married couples filing jointly in 2025. The deduction is also available for filers who itemize their deductions. The deduction phases out for individuals making $75,000 or above; or married couples making $150,000 or more.
The credit sunsets in 2028.
But seniors will also have to balance the money they will save on their taxes with increased Medicare costs this year.
The Centers for Medicare & Medicaid Services (CMS) released the 2026 costs for Medicare Part A and Part B programs in November.
The deductible for hospitalizations for up to 60 days, covered under Medicare Part A increased from $1,676 in 2025 to $1,736 in 2026.
The co-pay for days 61 through 90 increased from $419 in 2025 to $434; and for lifetime reserve days from $838 in 2025 to $868.
Co-pays for skilled nursing facilities increased from $209.50 to $217.00 after 20 days. Medicare Part A's monthly premium increased from $518 in 2025 to $565 in 2026; the discounted premium for individuals with more than 30 quarters of coverage rose from $285 in 2025 to $311 in 2026.
Medicare Part B premiums—which cover outpatient services, doctor visits, certain home health services, durable medical equipment, and other services not covered by Part A—also rose from $185 in 2025 to $202.90 in 2026. Deductibles will also increase from $257 in 2025 to $283 in 2026.
The supplemental premium for individuals who are on immunosuppressant drugs also increased to $121.60. Part B also includes progressive, income-related premium adjustments for beneficiaries who make income above certain thresholds.
The SSA announced earlier this year that benefits will increase 2.8 percent to keep up with the pace of inflation: COLA is directly tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This applies to all 71 million beneficiaries receiving Social Security and 7.5 million people receiving Supplemental Security Income payments.
“Social Security is a promise kept, and the annual cost-of-living adjustment is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security,” Social Security Administration Commissioner Frank J. Bisignano said in a press release on the Social Security Matters website on Oct. 24, 2025. “The cost-of-living adjustment is a vital part of how Social Security delivers on its mission.”