This year changes were made to social security income tax deduction for seniors, applicable for tax years 2025 through 2028. The provision aims to offer meaningful relief to individuals age 65 and older.
At Steward Ingram & Cooper PLLC, our Raleigh CPAs are closely monitoring these recent federal income tax updates that directly affect retirees. Join us as our team explores how social security tax deductions for seniors can impact your retirement income, reduce taxable income, and help you make informed financial decisions for the years ahead.
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What Is the New Tax Deduction for Seniors?
The new social security tax deduction for seniors—introduced under the Big Beautiful Bill Act—is effective beginning with the 2025 tax year. It provides an additional $6000 tax deduction for seniors. This is in addition to the current law’s additional standard deduction for seniors, which is the age-65-and-over increase that boosts your standard deduction (and is indexed for inflation each year).
In practice, the new $6,000 social security tax deduction for seniors stacks on top of that age-based increase if you claim the standard deduction; and even if you itemize instead of taking the standard deduction, you may still claim the new $6,000 amount. The $6,000 is calculated per eligible spouse (so $12,000 if both spouses are 65+). You must file jointly to claim both amounts on a joint return and include each qualifying individual’s Social Security number on the tax return.
How Social Security Benefits Are Taxed
Before determining how the new social security tax deduction for seniors affects your return, it’s helpful to know how social security benefits are taxed under federal income taxation:
- If your provisional income is below $25,000 for single filers or $32,000 for married filers, your social security benefits are not taxable.
- Between those thresholds and $34,000 (single) or $44,000 (joint), up to 50% of your social security benefits are taxable.
- Above those limits, up to 85% of your benefits may become social security benefits subject to tax.
By using the new tax deduction for seniors, some retirees may drop into a lower range, effectively reducing or even eliminating taxes on social security.
Eligibility Requirements for the Senior Tax Deduction
Not every retiree automatically qualifies for the social security tax deduction for seniors, making it essential to understand the requirements for eligibility, income thresholds, and filing status to ensure you receive the full benefit you’re entitled to under the new federal guidelines.
Age and Filing Requirements
To claim this senior tax deduction, a taxpayer must be 65 or older by the last day of the taxable year. For married taxpayers filing jointly, both spouses must meet the age requirement to claim the full $12,000.
Income Phaseouts and MAGI
The deduction phases out based on modified adjusted gross income (MAGI)—which represents your adjusted gross income plus certain untaxed amounts such as tax-exempt interest or excluded foreign income—so review the thresholds that apply to your filing status:
- Single Filers: The phaseout begins once MAGI exceeds $75,000. Above this level, the additional deduction is gradually reduced until it is fully phased out.
- Married Filing Jointly: The phaseout begins at $150,000 in MAGI. Couples above this threshold will see the additional deduction diminished based on how far their income exceeds the limit.
This design targets relief toward eligible seniors with modest to moderate federal income, while limiting the benefit for high-income taxpayers.
Filing Status and Verification
To claim the social security tax deduction for seniors, you must:
- File Jointly If Married: Couples must file jointly to receive the full deduction amount.
- Provide Social Security Numbers: The Social Security Administration requires that each qualifying individual be listed correctly on the tax return to validate eligibility.
How Social Security Tax Deductions Impact Taxable Income
The new senior tax deduction directly reduces overall taxable income, potentially lowering your federal income tax rate. This can help eliminate taxes on a portion of your social security benefits if your income level remains under certain thresholds.
For example, many seniors are surprised to learn that up to 85% of social security benefits are taxable depending on provisional income—a measure combining adjusted gross income, tax-exempt interest, and half of your social security income. Lowering that total through deductions can reduce or even eliminate taxes on social security altogether.
Examples
Example 1: Single Filer
A single filer age 68 with $60,000 in retirement income (including social security benefits) could reduce taxable income by $6,000 through this new deduction, plus the enhanced standard deduction already available to seniors.
Example 2: Married Filing Jointly
A married couple filing jointly with combined income of $110,000, including social security income, could claim a $12,000 senior deduction. This may help keep their provisional income below the level that triggers taxes on their social security benefits, helping to eliminate taxes on a significant portion of those benefits.
How Social Security Tax Deductions Impact Retirement Income
For many retirees, social security benefits make up only part of their total retirement income—which may also include pensions, IRA withdrawals, or investment earnings. The social security tax deduction for seniors can help balance these income sources by reducing how much of your total retirement income becomes taxable income under federal income tax rules.
This additional deduction provides an opportunity for seniors to preserve more of their nest egg each year. By reducing your adjusted gross income, the new deduction can lower your provisional income, potentially minimizing the percentage of your social security benefits subject to tax. It may also improve your eligibility for other income-based tax benefits and help you better manage federal taxes on distributions or investment gains.
Additional Examples
Example 1: Retiree with Pension and Social Security Income
A 70-year-old retiree with $40,000 in annual pension payments and $25,000 in social security benefits may be able to reduce overall taxable income by $6,000 using the new senior deduction. This adjustment could lower the taxable portion of their social security benefits, keeping more funds available for living expenses and healthcare.
Example 2: Married Filing Jointly with IRA Withdrawals
A married couple filing jointly who withdraws $90,000 annually from their IRAs, in addition to $30,000 in social security income, could qualify for a $12,000 senior deduction. This reduction in taxable income may help them avoid crossing into a higher federal income tax bracket or triggering higher Medicare premium surcharges, allowing them to retain more of their retirement income each year.
Example 3: Mixed Investment and Social Security Income
A single taxpayer age 67 receiving social security benefits along with investment dividends and interest totaling $50,000 could apply the new tax deduction for seniors to reduce federal income taxes owed on both the social security and investment portions of their income. The resulting decrease in taxable income might also preserve eligibility for certain credits or other deductions tied to income thresholds.
In each scenario, the deduction for seniors serves as a valuable tool for protecting retirement income from unnecessary taxation—especially for retirees in the Greater Raleigh area managing multiple sources of income.
Senior Social Security Tax Deduction FAQs
What is the tax deduction for seniors over 65?
For the 2025 tax year, the standard deduction remains available to all taxpayers, but seniors age 65 and older qualify for an additional deduction of $6,000 per person, separate from the new senior deduction. Married couples where both qualify can claim up to $12,000 extra.
How much of social security is taxable for seniors?
Depending on provisional income, up to 85% of your social security benefits may be taxable. Strategic use of the senior tax deductions can help reduce overall taxable income, potentially bringing your social security benefits into a lower tax bracket or removing them from taxation entirely.
Is social security going to be taxed in 2025 for seniors?
Yes, social security benefits will still be subject to federal income taxes in 2025. However, the new deduction for seniors and additional standard deduction may reduce or eliminate those taxes on social security for many retirees.
How does filing status affect the new tax deduction for seniors?
Your filing status determines whether you qualify for a single or joint amount. Married filing jointly taxpayers can claim up to $12,000, while single filers and married filing separately are limited to $6,000 each.
Can the senior deduction eliminate taxes on social security?
In some cases, yes. By lowering your adjusted gross income and overall taxable income, the senior deduction may keep your provisional income below thresholds where social security benefits become taxable. This can help eliminate taxes on your benefits altogether.
How can a Raleigh CPA help with senior tax deductions?
A Raleigh CPA can help you understand how the deduction for seniors and other tax deductions apply to your specific situation. At Steward Ingram & Cooper PLLC, our tax planning professionals review income, filing status, and social security benefits to determine how the new rules may affect clients’ taxable income. Our team stays current with changes to federal income tax laws and provides guidance to help seniors accurately claim deductions and plan for future tax years.
File Taxes with Steward Ingram & Cooper PLLC in Raleigh
For high-income seniors in Raleigh, Durham, Morrisville, and the surrounding areas of the Triangle, staying informed about changes to federal income taxes is vital to optimizing retirement planning and minimizing taxable income.
Are you looking for assistance claiming a deduction on your tax return? To inquire about our current capacity to take on new clients, please fill out the contact form below or give our experienced tax consultants a call at (919) 872-0866 today.
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