We’d like to share another helpful update from the One Big Beautiful Bill Act (OBBBA) that may benefit many seniors.
If you or your spouse are age 65 or older by the end of the tax year, you may qualify for a brand-new deduction.
How Much Is the Deduction?
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$6,000 per qualifying individual
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Single filers age 65+: $6,000 deduction
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Married filing jointly where both spouses are 65+: $12,000 deduction
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When Does This Start?
This deduction is available starting with the 2025 tax year and runs through 2028.
Does This Replace the Standard Deduction?
No — and that’s the best part. This new deduction is in addition to the standard deduction or itemized deductions.
Eligibility Limits
While this is a generous new tax break, there are two important limitations:
1. Income Phase-Out: The deduction is reduced — and eventually eliminated — once your income exceeds certain levels.
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Single Filers
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Phase-out begins: AGI over $75,000
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Fully eliminated: AGI $175,000+
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Married Filing Jointly
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Phase-out begins: AGI over $150,000
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Fully eliminated: AGI $250,000+
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2. Social Security Number Requirement: We must include the Social Security number(s) of the qualifying individual(s) on your tax return.
Under new IRS rules, if the SSN is missing or incorrect, the IRS can automatically deny the deduction without needing a full audit. Please double-check that we have your correct information.
Important Clarification About Social Security Taxation
You may have seen headlines claiming that the OBBBA “eliminates all federal tax on Social Security benefits.”
This is incorrect.
The longstanding rules for taxing Social Security benefits still apply. Up to 85% of benefits may be taxable depending on your provisional income (your total income plus certain additions).
So Why Are People Saying Social Security Won’t Be Taxed?
Because this new deduction will lower taxable income for many seniors — sometimes enough to reduce or eliminate the taxation of Social Security benefits.
But… Not Always
Higher-income seniors with significant pensions, investment income, or other retirement income may still have a portion of their benefits taxed.
If you’d like help understanding whether this new deduction applies to you — or how it may affect your Social Security taxes — please reach out anytime. We are here to help you make the most of these new rules.
Warm regards,
Randy Lauer, CPA
Stacy Prowse, Office Manager