Understanding the New “Senior Tax Bonus” — What It Means for You

A new provision in the recently signed One Big Beautiful Bill (OBBB), effective tax years 2025-2028, introduces a temporary "senior bonus" deduction, a powerful boost for Americans aged 65 and older. Here's how it works and how you can potentially benefit:

💵 What’s the Bonus?

• $6,000 deduction per taxpayer, or up to $12,000 for married couples if both spouses are 65+.

• This is on top of the standard deduction and the extra age-related deduction ($2,000 single; $1,600 per spouse if married).

• It's available whether you itemize or take the standard

📊 Eligibility & Income Limits

• To get the full deduction, your modified adjusted gross income (MAGI) must be:

  • ≤ $75,000 for single filers

  • ≤ $150,000 for joint filers

• The deduction phases out at 6¢ per dollar above those thresholds and disappears entirely at:

  • $175,000 for singles

  • $250,000 for married couples.

🧾 How Much Could You Save?

Income Situation	Max Deduction	Phase-Out Impact	Valuable Tip
MAGI ≤ threshold	$6,000–$12,000	None	Full benefit
MAGI slightly over	Reduced amount	Phase-out applies	Still helps
MAGI above limit	$0	—	No deduction

• For example, a single filer with MAGI of $100,000 gets a $6,000 deduction reduced by (100,000 – 75,000) × 0.06 = $1,500, so netting $4,500.

🎯 Who Benefits Most?

• Middle-income seniors: Those relying on Social Security and moderate retirement income can significantly reduce taxable income.

• Low-income seniors: May already pay little or no tax—so the deduction yields limited benefit.

• High-income seniors: Likely phased out of eligibility.

Notably, this isn't a repeal of Social Security taxation, but it may reduce the amount of benefits that becomes taxable.

⏳ When & How Long?

• Applies to tax years 2025 through 2028; it’s a temporary benefit pending renewal by Congress.

✅ Strategic Planning Tips from Kamish & Associates

1. Track your MAGI: Ensure it stays within limits to retain the full deduction.

2. Time withdrawals consciously: Consider pension or IRA distributions to stay below thresholds.

3. Think about Roth conversions: Avoid bumping your MAGI too high in deduction years.

4. Explore work income carefully: Evaluate whether part‑time work is worth potential phase‑out.

5. Annual tax planning: With this deduction's temporary nature, yearly adjustments can maximize benefit.

   
   

✉️ Final Word from Kamish & Associates

This $6,000 “senior bonus” deduction is a significant opportunity for eligible retirees to keep more of their hard-earned money, especially if you're in the middle-income bracket. But with income limits and phase-outs, effective tax planning is essential.

Need help tailoring your strategy? Contact Kamish & Associates for a personalized review. We'll help you navigate MAGI limits, optimize withdrawals, and make sure you're maximizing every possible benefit.

🔗 Stay Connected: Follow our blog for updates through 2028 on this deduction and stay ahead of the curve!