Harris: The $6,000 Senior Tax Deduction: What does it mean?

By Charlestien Harris, Retired Financial Coach at Southern Bancorp

Taxes are a fact of life, and being a senior citizen is no exception. Many people believe that Social Security income is not taxable, but that’s not entirely true. Whether your Social Security benefits are taxable depends on your income level and tax filing status.

In July of this year, Congress passed – and the president signed into law – a temporary federal tax break for eligible taxpayers aged 65 or older. Known as the $6,000 Senior Tax Deduction, this benefit applies to tax years 2025 through 2028. It is an additional deduction available even if you itemize your taxes, unlike the standard age-based deduction. Let’s take a closer look at what this means for seniors.

1. Know the Requirements

Eligibility is key – not every senior will qualify for this deduction. To be eligible, you must:

• Be 65 or older by the end of the tax year,
• Have a work-authorized Social Security number, and
• Have a Modified Adjusted Gross Income (MAGI) below certain thresholds.

The deduction begins to phase out for taxpayers with MAGI over $75,000 for single filers and $150,000 for joint filers.

2. How the Deduction Works

Understanding how the deduction functions is essential. Here are the key points:

• Amount: The maximum deduction is $6,000 per qualifying individual.
• Single filers: May claim up to $6,000.
• Married filing jointly: If both spouses are 65 or older, they may claim up to $12,000 combined ($6,000 each). If only one spouse qualifies, the deduction is limited to $6,000.
• Full phase-out: The deduction is completely eliminated for filers with MAGI above $175,000 (single) and $250,000 (married filing jointly).

This $6,000 bonus is added on top of your regular standard or itemized deductions. Unlike the standard age-based deduction, this benefit is available even if you itemize.

3. Claiming the Deduction

You may be wondering how to claim this deduction. Fortunately, no separate tax form is required. On your 2025 federal tax return (Form 1040 or 1040-SR), simply check the box indicating you are 65 or older. If you qualify, the IRS will automatically apply the additional deduction.

4. You Do Not Need to Itemize

Unlike some tax breaks, this deduction is available whether you itemize or take the standard deduction. An itemized deduction refers to specific eligible expenses that can be subtracted from your adjusted gross income (AGI) to reduce your taxable income. Taxpayers may choose to itemize or take the standard deduction – whichever results in a greater tax benefit.

5. Your Social Security Income May Still Be Taxable

It’s important to note that this deduction does not eliminate federal taxes on Social Security benefits. Instead, it provides a separate deduction that may help lower your overall taxable income. Federal tax on Social Security benefits depends on your combined income and filing status. Combined income is calculated as:

Adjusted Gross Income + Tax-Exempt Interest + ½ of Social Security Benefits

Up to 85% of your Social Security benefits may be taxable, depending on your income level.

Understanding the details of this new tax deduction is crucial. With tax season just a few months away, getting a head start can help you prepare your own taxes or provide accurate information to your tax preparer. While this law doesn’t eliminate taxes on Social Security benefits, it may reduce or eliminate the amount of benefits that are taxed by lowering your overall taxable income.

For more information on this and other financial topics, feel free to email me at charlestienharris77@gmail.com or write to me at P.O. Box 1825, Clarksdale, MS.

Until next week – stay financially fit!

Charlestien Harris is our financial contributor, a retired financial expert with Southern Bancorp Community Partners.