NASHVILLE, Tenn. – Retiring in Tennessee offers numerous advantages, from beautiful mountain landscapes to the absence of state income tax on wages and retirement benefits.
While the state does not tax Social Security or most retirement income, seniors over 65 still benefit from federal tax breaks, including the extra standard deduction. This article explains how this deduction works and why it is a vital tool for retirees in 2025.
What is the Standard Deduction?
The standard deduction is a set amount that taxpayers can subtract from their income before federal taxes are calculated. Most Americans take the standard deduction instead of itemizing their expenses, as it simplifies the filing process.
For seniors aged 65 and older, the IRS allows an additional standard deduction, offering greater relief and helping older taxpayers manage their retirement income.
Details on the Federal Standard Deduction for Seniors
For the 2025 tax year, the standard deduction is:
- $14,600 for single filers
- $29,200 for married couples filing jointly
Seniors over 65 qualify for an extra deduction:
- $1,950 if filing as single or head of household
- $1,550 per spouse if filing jointly
This means a married couple, where both spouses are 65 or older, could claim a total standard deduction of $32,300 according to Kiplinger.
How Tennessee’s Tax System Benefits Seniors
Unlike most states, Tennessee does not tax earned wages, Social Security benefits, or most retirement income. This makes it an especially attractive state for seniors who depend on fixed incomes, such as pensions, IRAs, or Social Security.
However, Tennessee does not have its own version of a state-level standard deduction or extra senior exemption. Therefore, retirees in Tennessee mainly benefit from the federal standard deduction system when filing their annual tax returns.
Eligibility Criteria for the Extra Deduction
To qualify for the federal extra standard deduction for seniors, you must:
- Be 65 or older by the end of the tax year
- File a federal tax return using Form 1040 or 1040-SR
- Opt for the standard deduction instead of itemizing your expenses
If you are also legally blind, you may be eligible for an additional deduction beyond the senior increase.
Why the Extra Deduction Matters for Tennessee Seniors
Even though Tennessee doesn’t levy a state income tax, seniors may still owe federal income tax on certain types of income, such as:
- Withdrawals from traditional IRAs and 401(k)s
- Pension payments
- Investment earnings like dividends or capital gains
The extra standard deduction reduces taxable income at the federal level, which can help lower or eliminate a senior’s tax liability. This is particularly beneficial for retirees who are managing healthcare expenses, rising housing costs, or living primarily on fixed retirement benefits.
Tips for Filing Taxes in Tennessee as a Senior
- Use Form 1040-SR: Seniors over 65 can use the simplified 1040-SR tax form, which clearly highlights the extra deduction amounts.
- Double-check eligibility: If both spouses are over 65, be sure to claim the deduction for each.
- Combine with tax credits: Seniors may qualify for the Credit for the Elderly or Disabled, depending on income.
- Plan withdrawals wisely: Large withdrawals from retirement accounts may push you into a higher tax bracket. Spreading them out can help maximize your savings.
Conclusion
Tennessee’s lack of a state income tax makes it one of the most retirement-friendly states in the U.S. In addition, the extra federal standard deduction provides seniors with further tax savings, helping retirees stretch their budgets. With Tennessee’s low cost of living and scenic lifestyle, this tax break is one of many reasons why retiring in the Volunteer State continues to be a smart financial choice for older adults.
Do you have tips for maximizing tax benefits as a retiree in Tennessee? Join the conversation below!
