Practical Cents #3: What to Know About the New Senior Tax Deduction
This Practical Cents episode explains a new $6,000 tax deduction available to taxpayers turning 65 between 2025 and 2028 under the One Big Beautiful Bill Act. Cullen Martin walks through the income phase-out thresholds for single and married filers and outlines planning levers, like Social Security timing and Roth conversions, that can affect whether someone qualifies.
This Practical Cents episode explains a new $6,000 tax deduction available to taxpayers turning 65 between 2025 and 2028 under the One Big Beautiful Bill Act. Cullen Martin walks through the income phase-out thresholds for single and married filers and outlines planning levers, like Social Security timing and Roth conversions, that can affect whether someone qualifies.
Key takeaways
- Taxpayers turning 65 between 2025 and 2028 may qualify for an additional $6,000 deduction under the One Big Beautiful Bill Act.
- For single filers, the deduction phases out between $75,000 and $175,000 of modified adjusted gross income.
- For married couples, the deduction phases out between $150,000 and $250,000 of modified adjusted gross income.
- Decisions like when to start Social Security or whether to do a Roth conversion can affect eligibility for this deduction.
Hi everyone, and thank you for joining me. If you are turning 65 between 2025 and 2028, you need to know this. Through the recent passage of the One Big Beautiful Bill Act, taxpayers 65 and older during these years now may have an additional $6,000 deduction per person. This additional deduction comes regardless of whether you take the standard deduction, the amount you get just by being a taxpayer, or itemized deductions, the amount you get from things like charitable contributions or paying mortgage interest.
Now, you're probably wondering, do I personally benefit from this? For single filers, this additional deduction begins to phase out at $75,000 of modified adjusted gross income, and individuals over $175,000 of modified adjusted gross income are ineligible. For married couples, this additional deduction begins to phase out at $150,000 of modified adjusted gross income, and couples over $250,000 of modified adjusted gross income are ineligible.
Now, why does this matter? With a limited window of opportunity to plan, there are lots of considerations, like, do I delay Social Security to avoid the income? Do I accelerate more Roth conversions? Are there highly appreciated single stocks I can sell and diversify out of? The answer: it depends. At Presilium, we are focused on your financial plan for the next 40 years, not just the next four, but by maximizing and being thoughtful about present-day opportunities like this, we can appropriately plan for your long-term picture to look better each day too. Thanks for joining me.
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