10 Tax Breaks Many Retirees Overlook

Saving money in retirement is not just about trimming expenses or squeezing the most out of Social Security. A smart tax plan can be just as important for protecting your income once you leave the workforce.

Here are some of the most common deduction mistakes retirees make, and how to avoid leaving money on the table at tax time.

Missing the larger deduction available to people 65 and older

If you are 65 or older, you may be eligible for an additional $6,000 deduction, or $12,000 for married couples. You can generally claim it whether you itemize or take the standard deduction.

Because this is a relatively new tax break, it is easy to miss when filing. If your tax preparer does not mention it, bring it up yourself. Income limits may apply, but it is worth checking carefully.

For the 2026 tax year, the extra standard deduction for taxpayers age 65 and older is $1,650, or $2,050 for those who are unmarried and not a surviving spouse.

Not subtracting home improvement costs from home sale profit

When you sell a home, profits above $500,000 for a married couple or $250,000 for an individual can be subject to capital gains tax. But you may be able to reduce that profit by counting the money spent on repairs, remodels, and renovations.

That includes not only work done to prepare the home for sale, but also qualifying improvements made throughout the time you lived there.

Overlooking deductions offered by your state

Not every state provides senior-specific deductions, but if yours does, it should not be ignored. You can usually find the available deductions on the website of your state tax agency, such as the Department of Revenue, and your accountant can also help point you in the right direction.

Failing to keep good records of medical expenses

Medical expenses that exceed 7.5% of your adjusted gross income may be deductible, but only if you have tracked them consistently during the year.

If you miss the deduction this time, start recording every medical cost going forward so you can be ready for next tax season. Be sure to include Medicare premiums, dental work, vision care, and out-of-pocket prescription costs.

Ignoring interest paid on a new car loan

If you bought a new car during the 2026 tax year, you may be able to deduct up to $10,000 in interest paid on the loan, as long as the vehicle weighs under 14,000 pounds and was assembled in the United States.

The deduction is reduced if your income is above $100,000 as an individual or $200,000 as a married couple.

Missing the expanded SALT deduction

State and local taxes, or SALT, have long been deductible for taxpayers who itemize. For several years, though, the limit was capped at $10,000, or $5,000 for married couples filing separately. For the 2026 tax year, that cap has risen to $40,400, or $20,200 for married couples filing separately.

Remember that you must itemize to claim SALT, so compare that option with the standard deduction before deciding which one gives you the better result.

Not claiming long-term care insurance premiums

Because Medicare does not cover long-term care, many older adults buy separate insurance to help cover those future costs. These policies can be expensive, but the premiums may be tax-deductible.

The amount you can deduct increases with age, and people age 71 and older can deduct up to $6,200 of their premium.

Assuming you are not eligible for the Saver's Credit

If you are still contributing to a retirement account, you may qualify for the Retirement Savings Contributions Credit, also known as the Saver's Credit, if your income is below a certain threshold.

This credit can be worth as much as $1,000 for an individual or $2,000 for a married couple, depending on how much you contributed to a retirement savings account during the prior tax year.

Forgetting to claim capital losses

Ideally, your investment portfolio is producing gains. But if you have sold investments at a loss, you may be able to deduct up to $3,000 of those losses against your income.

Not keeping up with new tax rules

Do not assume this year’s taxes will work exactly like last year’s. Tax laws can change and affect your bottom line through new deductions, income limits, or senior-related benefits.

Your accountant or tax professional should help explain any changes when preparing your return, but if something is unclear, ask questions.

The bottom line

Itemizing can be a helpful way to lower your tax bill and make retirement savings last longer. Still, it is only one part of a strong tax strategy that can help keep your finances on track as you age.

A tax professional or retirement planner can help build a strategy that includes planned withdrawals, charitable giving, and other tax-friendly moves.

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