Reaching retirement age can bring a welcome change of pace—but it can also bring a whole new set of tax considerations.
Once you begin collecting Social Security, taking distributions from retirement accounts, making charitable donations, or simply enjoying the benefits of years of saving, the tax rules can become more complicated. And with recent federal tax changes, there are some additional opportunities older adults should know about.
Here are four tax considerations that could make a difference in your tax planning.
- Your Charitable Giving Could Satisfy Your RMD
If you are 70½ or older and regularly give money to a church or other qualified charity, there may be a more tax-efficient way to make those contributions.
A Qualified Charitable Distribution (QCD) allows you to transfer money directly from an eligible IRA to a qualified charitable organization. When the requirements are met, the distribution can be excluded from your federal taxable income. Even better, a QCD can count toward your Required Minimum Distribution (RMD) for the year.
Think about it this way: Suppose you are required to take $20,000 from your IRA this year. You don’t necessarily need that money to live on, but you regularly give $10,000 to your church.
Instead of taking the entire $20,000 as a taxable IRA distribution and then writing a $10,000 check to your church, you may be able to have $10,000 sent directly from your IRA to the church as a QCD. That $10,000 can satisfy part of your RMD while generally not being included in your taxable income.
You are still giving the money you intended to give—but you may be able to do so in a more tax-efficient way.
There are rules that matter. The money must generally go directly from the IRA trustee to an eligible charitable organization, and you must be at least 70½ when the distribution is made. A QCD also has an annual dollar limit, which is adjusted for inflation. For 2026, the limit is $111,000. (IRS)
And remember, you don’t get to double dip. If the QCD is excluded from income, you generally cannot also claim that same amount as a charitable contribution deduction.
The takeaway: If charitable giving is already part of your financial plan and you have an IRA subject to RMDs, talk with your tax professional before simply taking the distribution and writing the check. The way the money moves can make a difference.
- Social Security Isn’t Necessarily Tax-Free
Many people are surprised to learn that Social Security benefits can be taxable for federal income tax purposes.
It doesn’t matter whether you started Social Security early, waited until your full retirement age, or delayed benefits to receive a larger monthly payment. Once you are receiving Social Security, whether some of those benefits are taxable depends on your total income.
The IRS looks at a combination of your Social Security benefits and other income, including things such as wages, interest, dividends, pensions, IRA distributions and other taxable income. Depending on the amount, as much as 85% of your Social Security benefits can be included in federally taxable income.
That does not mean you pay tax on 85% of your benefits or at an 85% tax rate. Rather, up to 85% of the benefits may be included in your taxable income and then taxed at your applicable federal income tax rate.
This is one reason retirement income planning is so important.
For example, taking a large IRA distribution in the same year you sell an investment for a significant gain could increase your overall income enough to make more of your Social Security taxable. A decision that looks reasonable when considered by itself can have a different tax consequence when all of your income sources are considered together.
The takeaway: Don’t look at Social Security in isolation. The tax impact of your benefits can depend on what else is happening on your tax return.
- The New $6,000 Senior Deduction Could Lower Your Federal Taxable Income
The One Big Beautiful Bill brought a new federal tax benefit specifically for older taxpayers.
For tax years 2025 through 2028, individuals age 65 and older may qualify for an additional federal deduction of up to $6,000 per person. A married couple filing jointly where both spouses qualify could potentially receive a $12,000 deduction.
There is an important distinction here: This is a deduction, not a $6,000 tax credit. In other words, it reduces the amount of income subject to federal income tax rather than reducing your tax bill dollar-for-dollar.
The deduction is available whether you itemize deductions or take the standard deduction, but it is subject to an income-based phaseout. The phaseout begins when modified adjusted gross income exceeds $75,000 for single filers and $150,000 for married couples filing jointly.
To qualify, you must be at least 65 by the end of the tax year. There are also Social Security number and filing-status requirements for married taxpayers.
And because this deduction is currently scheduled to apply through 2028, it is something to keep on your radar during the next several tax years.
The takeaway: If you’re 65 or older, the new senior deduction could reduce your federal taxable income, although higher-income taxpayers may receive a reduced benefit or none at all.
- Maryland Has a Tax Break for Centenarians
Here’s a tax break that may not apply to many people—but if you live long enough, Maryland has made it a pretty significant one.
Under Maryland law, an individual who is at least 100 years old on the last day of the tax year may subtract up to $100,000 of income from Maryland adjusted gross income.
The provision applies to the individual’s income for the year, up to the $100,000 maximum. It was enacted beginning with tax years after December 31, 2021.
To put that into perspective, imagine a Maryland resident who is 100 years old and receives $80,000 of income during the year. Subject to the applicable rules, $80,000 could potentially qualify for the Maryland centenarian subtraction.
If the individual receives $150,000 of income, up to $100,000 could potentially be subtracted for Maryland purposes.
This is a Maryland state tax benefit—it doesn’t mean the income is automatically excluded from federal taxation. That distinction is important when planning for a centenarian’s overall tax liability.
And while reaching 100 may seem like a distant milestone, it illustrates an important point about tax planning: Age-based provisions can be easy to overlook because they don’t apply to everyone.
Don’t Let Age Be an Afterthought in Tax Planning
Retirement doesn’t mean your tax planning days are over. In fact, your tax return can become even more important because you may have several different sources of income and more flexibility in deciding when and how to receive that income.
A few strategic decisions can have very different tax consequences:
- Taking an IRA distribution versus making a QCD directly to charity.
- Receiving additional retirement income in a year when your Social Security is already pushing into taxable territory.
- Understanding whether you qualify for the new senior deduction.
- Taking advantage of Maryland-specific benefits when you qualify.
The key is to look at the whole picture rather than making each financial decision independently
If you are retired or approaching retirement, don’t wait until tax filing season to ask how these rules affect you. Tax planning can help you determine not only how much tax you may owe, but also whether there are opportunities to legally reduce your taxable income before the year is over.
For help with your tax planning, contact Saunders Tax & Accounting at http://www.saunderstax.com or call us at 301-714-2071. Open Monday – Thursday, 9 am to 5 pm. Awarded the Hagerstown Hot List 2026 and Hagerstown Chamber of Commerce “2023 Small Business of the Year” by providing a Less Taxing Life and More Prosperous Solutions since 1984!
