John K Howard CPA

01/13/2026

Senior Deduction Under OBBBA (2025–2028)
🎯 Core Benefit
$6,000 deduction per qualifying senior (age 65+)
$12,000 deduction for married couples if both spouses are 65+
Applies to tax years 2025, 2026, 2027, and 2028
This deduction is in addition to:
The regular standard deduction
The existing additional standard deduction for seniors
Any itemized deductions
So seniors get this on top of everything else.
👤 Eligibility Requirements
Must be age 65 or older by December 31 of the tax year
Must have a valid Social Security number
If married, you must file jointly to claim the deduction
You do not need to be retired or receiving Social Security benefits
💵 Income Phase Out Rules
The deduction phases out based on Modified Adjusted Gross Income (MAGI):
Single Filers
Phase out begins: $75,000 MAGI
Fully phased out: $175,000 MAGI
Reduction rate: 6% of income above $75,000
Married Filing Jointly
Phase out begins: $150,000 MAGI
Fully phased out: $250,000 MAGI
Same 6% reduction rate
Example: A single filer with MAGI of $100,000 exceeds the threshold by $25,000 → Deduction reduced by 25,000×0.06=1,500So their $6,000 deduction becomes $4,500.
🧾 How It Works on Your Tax Return
Available whether you itemize or take the standard deduction
Reported on a new form (e.g., Schedule 1 A (per Thomson Reuters)
Requires listing the qualifying senior’s SSN
📌 Practical Impact
For a married couple where both spouses are 65+ in 2025:
Standard deduction: $31,500
Additional senior standard deduction: $3,200
New OBBRA senior deduction: $12,000
Total deduction: $46,700
That’s a substantial reduction in taxable income.
🧠 Planning Notes
i suggest:
Managing MAGI to stay below phase out thresholds (e.g., timing capital gains, Roth conversions)
Filing jointly if married, since MFS disqualifies you

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01/13/2026

🧾 Summary of Tax Changes Enacted by the One Big Beautiful Bill Act (OBBBA)
🌟 Big Picture Takeaway
The OBBBA creates several new temporary deductions, raises the standard deduction, expands SALT deductions, and increases the estate tax exemption, while also eliminating certain credits and deductions. It represents a major continuation and expansion of the 2017 TCJA framework, with most benefits concentrated in the 2025–2029 tax years.

Major New Deductions for Individuals:
Several new above the line deductions were created, allowing taxpayers to reduce taxable income whether or not you itemize:
1. Deduction for Tips
• Up to $25,000 of reported tip income may be deducted.
• Phases out starting at $150,000 MAGI (single) or $300,000 (married filing jointly).
• Applies only to industries where tipping is customary.
• Effective 2025–2028.
2. Deduction for Overtime Pay
• Up to $12,500 (single) or $25,000 (married filing jointly).
• Same income phase outs as the tip deduction.
• Effective 2025–2028. Note: the deduction is only for the overtime premium (the ½ of the the and 1½. The tax benefit will only be recovered upon filing your tax return).
3. Deduction for Car Loan Interest
• Up to $10,000 of interest on new car loans for U.S.-assembled vehicles.
• Income phase outs: $100,000 (single) / $200,000 (joint).
• Effective 2025–2028.
4. Deduction for Seniors
• IRS lists this as one of the four major new deductions created by the bill.
💰 Changes to Existing Tax Rules
Permanent Increase in the Standard Deduction
• Individuals: from $15,000 → $15,750
• Married filing jointly: $30,000 → $31,500
• Indexed for inflation starting in 2025.
Temporary Expansion of the SALT Deduction
• Cap raised from $10,000 → $40,000 for 2025–2029.
• Cap increases 1% per year.
• Phased down for high income taxpayers (30% reduction above $500,000 MAGI).
• Reverts to $10,000 in 2030.
Estate & Gift Tax Exemption Increase
• Raised to $15 million per decedent starting in 2026.
• Indexed for inflation.
• Portability for surviving spouses remains.
Elimination of Miscellaneous Itemized Deductions
• Permanently removed.
🚗 Other Notable Provisions
• IRS is phasing out paper refund checks; direct deposit encouraged.
• The bill extends many provisions of the 2017 Tax Cuts and Jobs Act, preventing several scheduled expirations.
• Some clean energy credits and the federal EV tax credit are eliminated or phased out.

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12/27/2025

12/02/2025

Christmas Blessings to all!