OBBBA: Bonus deduction for seniors

The Omnibus Budget Reconciliation Bill for 2025, known as the One Big Beautiful Bill Act (OBBBA), made the Tax Cuts and Jobs Act of 2017 tax rates and standard deductions permanent, affecting a significant number of taxpayers.
There’s an added bonus for taxpayers age 65 and over, an additional deduction for tax years 2025-28. If you are age 65 or over by 12/31/2025, you may be able to claim the bonus deduction of $6,000 as a single filer, or $12,000 for filers who are married filling joint. Fortunately, the bonus deduction is available regardless of whether you take the standard deduction or you itemize.
Some income limitations do apply. The deduction begins to phase out for taxpayers with a modified adjusted gross income (MAGI) exceeding $75,000 for single filers and $150,000 for joint filers. The deduction is reduced by 6% of the amount of the MAGI over the threshold. It phases out completely for single taxpayers with income above $175,000 and married taxpayers with income above $250,000.
To make good news even better, the bonus deduction is in addition to the already existing age 65+ deductions under existing law. In 2025, for single filers that’s $15,750 + 2,000 + 6,000 = $23,750. For married filling joint, that’s $31,500 + 3,200 + 12,000 = $46,700. Therefore, if your MAGI qualifies, single tax filers will pay zero tax on their first $23,750 of income and married filling joint taxpayers will pay zero tax on their first $46,700 of income.
This presents planning opportunities for creative thinkers. For example, if your income is on the margin of disallowing you to claim the credit and you must take a Required Minimum Distribution and are over age 70 ½, you can consider a Qualified Charitable Distribution from your IRA to a 501c3 charity. When you use your RMD to make a QCD, your taxable income is reduced dollar for dollar.

If you itemize rather than use the standard deductions, you could gift a highly appreciated asset such as stock, and take advantage of the charitable deduction without imposing capital gains taxation, keeping your taxation lower.
If you are working, consider a deductible contribution to an eligible retirement account to lower your income.
Be careful when navigating the complexities of income calculations. It is always recommended to seek guidance from a qualified tax professional who can assist with your individual tax situation.
This new provision of the OBBBA is great news for our mature taxpayers who either already qualify for, or, through careful planning, can take advantage of the new bonus deduction for seniors.
LouAnn Schulfer of Schulfer & Associates, LLC Wealth Management can be reached at (715) 343-9600 or louann.schulfer@lpl.com, TheWealthInformationLady.com, SchulferAndAssociates.com.
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.