Individual taxpayers age 65 or older may qualify for a new senior deduction of up to $6,000 for tax years 2025 through 2028, as introduced in the One Big Beautiful Bill Act (OBBBA).  However, there is an income-based phaseout that could reduce or eliminate the deduction for some individuals. Fortunately, if your income is high enough that the phaseout is a risk, there are steps you can take before year end to help preserve the deduction. 

About the New Senior Deduction

Individuals age 65 or older on Dec. 31 of the tax year may be eligible for the deduction and do not have to be receiving Social Security benefits to claim it. 

If both spouses of a married couple filing jointly are age 65 or older, each spouse is potentially eligible for the $6,000 deduction, for a combined total of up to $12,000. However, a joint return must be filed; married couples filing separately aren’t eligible. 

Combining the Senior and Standard Deductions

Senior taxpayers (age 65 or older) are already eligible for an additional standard deduction on top of the basic standard deduction. The following examples illustrate how large the three deductions can be on a combined basis for 2025: 

Senior Deduction Phaseout

The senior deduction begins to phase out when modified adjusted gross income (MAGI) exceeds $75,000 for single filers or $150,000 for joint filers. The deduction is eliminated when MAGI exceeds $175,000 or $250,000, respectively. Specifically, the deduction is phased out by 6% of the excess of your MAGI over the applicable phaseout threshold. For this purpose, MAGI means your “regular” AGI increased by certain tax-exempt offshore income (which most taxpayers don’t have). 

Here are two examples:

1. Single filer: Your MAGI for 2025 is $130,000. Under the phaseout, your senior deduction is reduced by $3,300 [6% × ($130,000 − $75,000)].  So your senior deduction is $2,700 ($6,000 − $3,300).
2. Joint filers: Your MAGI for 2025 is $220,000. Under the phaseout rule, your two senior deductions are reduced by $4,200 each [6% × ($220,000 − $150,000)]. So your senior deduction is $1,800 each ($6,000 − $4,200), or $3,600 on a combined basis.

Year-End Planning Tips for the New Senior Deduction

If you’re concerned your 2025 MAGI could exceed the applicable phaseout threshold — or that your senior deduction could be completely phased out — there are moves you can make by Dec. 31 to help maximize your deduction. Specifically, take steps to reduce your MAGI. Here are some potential ways to do it:

• Harvest capital losses in taxable brokerage accounts to offset capital gains that would otherwise increase your MAGI.
• Defer selling appreciated securities held in taxable brokerage accounts to avoid increasing your MAGI by the capital gains you’d recognize if you sold them.
• If you’re still working, maximize salary-reduction contributions to tax-deferred retirement accounts, like your traditional 401(k), which will reduce your MAGI.
• Defer or spread out Roth IRA conversions over several years, because your MAGI will be increased by taxable income triggered by the conversions.
• If you’re age 73 or older and thus subject to required minimum distributions (RMDs) on your traditional IRA(s), consider making IRA qualified charitable distributions (QCDs). Done properly, the QCDs will count toward your RMD and will be excluded from your taxable income and your MAGI. 

Depending on your situation, there may be other moves you can make that will reduce your MAGI. 

Here to Help

The new senior deduction can be a valuable tax saver for eligible taxpayers. Our individual tax pros can help determine the best year-end tax planning strategies for your particular situation. To obtain assistance, contact us today.