Denver, CO – Seniors in Colorado are set to benefit from federal and state tax breaks in 2025, including the extra standard deduction for taxpayers aged 65 and older. This deduction, combined with Colorado’s retirement-friendly tax policies, helps older residents preserve more of their income while living on fixed budgets.
What Is the Extra Standard Deduction?
The extra standard deduction is a federal tax benefit for taxpayers who are 65 or older by December 31 of the tax year. It is added to the regular standard deduction, reducing taxable income and lowering federal tax obligations.
This deduction is particularly helpful for retirees, as it offsets rising costs of living such as healthcare, housing, and groceries.
Who Qualifies in Colorado?
To claim the extra deduction, seniors must:
- Be 65 years of age or older by the end of the tax year.
- File taxes as single, head of household, or married filing jointly.
- Provide proof of age if requested (driver’s license, state ID, or birth certificate).
Married couples filing jointly can each claim the deduction, effectively doubling the tax savings if both spouses are over 65.
Deduction Amounts for 2025
For the 2025 tax year, the extra standard deduction amounts are:
- Single or Head of Household: $1,550 additional deduction.
- Married Filing Jointly: $1,250 per spouse age 65+.
A single senior can reduce taxable income by $1,550, while a married couple over 65 could claim $2,500 in extra deductions. These amounts are added to the regular standard deduction, which is updated annually for inflation.
Why It Matters in Colorado
While this deduction is federal, it works in tandem with Colorado’s state tax benefits to further reduce the retirement tax burden. Seniors can combine the federal deduction with state programs to maximize savings.
Other Tax Benefits for Colorado Seniors
Colorado seniors can also benefit from:
- Retirement Income Deduction: Seniors 65+ can exclude up to $24,000 of retirement income annually, including pensions, IRAs, 401(k)s, and certain annuities.
- Social Security Exemption: All Social Security benefits are fully exempt from state income tax.
- Homestead Exemption: Seniors 65+ who have lived in their home 10+ years may qualify for a property tax exemption on the first $200,000 of home value.
- No Estate or Inheritance Tax: Colorado imposes no estate or inheritance taxes, providing additional financial peace of mind.
Final Thoughts
For Colorado seniors, the extra standard deduction provides a simple and effective way to reduce federal taxes in 2025. When paired with state-level exemptions, retirees can enjoy greater financial security and stretch their retirement income further.
Have you claimed your senior tax benefits in Colorado? Share your experiences and tips in the comments below.
