Inquiry for the Editor on July 18: Seeking Clarification Regarding the $6,000 Tax Break for Seniors
The One Big Beautiful Bill (OBBB) has introduced a new tax break for seniors, effective from the 2025 tax year through 2028. Known as the $6,000 senior tax deduction, this benefit is designed for individuals aged 65 and older [1][3].
Who is Eligible?
To qualify for this deduction, the taxpayer must be 65 years old or older by the last day of the taxable year. The deduction applies regardless of whether the taxpayer itemizes deductions or takes the standard deduction. It's important to note that both spouses must include valid Social Security Numbers on the tax return if they are filing jointly to claim both deductions [3].
How Much Can You Save?
For individuals, the $6,000 senior tax deduction can be claimed on Form 1040. For joint filers where both spouses are 65 or older, the total deduction amounts to $12,000 [1][3].
Phaseout Limits
The deduction begins to phase out for single filers with a modified adjusted gross income (MAGI) above $75,000, and for joint filers, the phaseout begins at $150,000 MAGI [1][3].
Calculating Modified AGI
To calculate modified AGI for the $6,000 senior deduction income threshold, start with adjusted gross income on line 11 of Form 1040, then add foreign earned income exclusion, foreign housing exclusion, and amounts excluded from gross income because they were received from sources in Puerto Rico or American Samoa [1].
Submitting Questions and Getting Answers
Readers can submit questions about tax changes in the OBBB, and answers will be addressed in future Ask the Editor round-ups. Subscribers of The Kiplinger Tax Letter and The Kiplinger Letter can also ask tax questions to Joy Taylor [2].
Important Considerations
The answers provided in Ask the Editor, Tax Edition are for general informational purposes only, and do not constitute independent financial, legal, or tax advice. It's always advisable to consult with a tax professional for personalised advice.
Lastly, it's worth noting that while the $6,000 senior tax deduction can help reduce taxable income, it does not eliminate taxes on Social Security benefits. However, it may help about 90% of seniors to avoid owing federal tax on those benefits [1][2]. The deduction expires after the 2028 tax year unless extended by Congress [1][3].
In addition to the $6,000 senior tax deduction, some individuals might be interested in exploring Decentralized Finance (DeFi) solutions for personal-finance management, which can offer various lending, borrowing, and investing options [4]. Furthermore, for those aged 65 and older who are tech-savvy and keen on modern finance trends, Initial Coin Offerings (ICOs) are digital fundraising events that provide a unique opportunity for investing in new projects [4]. Always remember, it's crucial to conduct thorough research and consult a financial advisor before participating in ICOs or investing in DeFi [4].
