Let’s talk taxes for a moment

Here’s a friendly update from your Vice President of Senior Homes and Trust Sales at JohnHart Real Estate, Robbyn Battles. Let’s talk taxes for a moment. I’m not a tax expert and this is not tax advice, but part of my job is staying aware of changes that may affect my 65 plus clients, especially when those changes could impact your pocketbook. This is one of those updates that is simply good to know if you have not heard about it yet.

Starting with the 2025 tax year and running through 2028, there is a new temporary federal deduction for taxpayers age 65 and older. You may hear it called a “senior bonus” deduction. If you qualify, it can reduce your taxable income by up to $6,000 per eligible person, or up to $12,000 for a married couple if both spouses are 65 or older by year end. The IRS explains that this is an additional deduction on top of the existing rules for older taxpayers.

Here is the part many people miss. This deduction is not strictly age only. It also depends on income, because it can be reduced for higher income filers through what is called an income phase out.

An income phase out simply means the benefit does not disappear all at once. Instead, once your income reaches a certain point, the deduction gradually shrinks. The higher your income goes above the threshold, the smaller the deduction becomes, until it eventually phases out completely.

For this senior deduction, the phase out begins when your modified adjusted gross income, often shortened to MAGI, is over $75,000 for single filers, or over $150,000 for married couples filing jointly. Above those levels, the deduction is reduced. At higher incomes, it may be reduced to zero, meaning some seniors will not receive any benefit from this particular deduction.

You might also wonder if every senior is required to file a federal return. The answer is no. Some seniors, especially those living primarily on Social Security with little or no other taxable income, may be below the filing threshold and may not be required to file a return. In that situation, a deduction like this may not apply simply because no return is being filed. If someone is unsure, this is exactly the kind of question a CPA or enrolled agent can answer quickly.

Now let’s talk about how the $6,000 actually helps. This is a deduction, not a credit. A deduction reduces taxable income, which can reduce the tax you owe, but it does not reduce your tax bill dollar for dollar.

So what is the maximum income to benefit from any of this. The cleanest way to think about it is this. The best chance of receiving the full deduction is staying at or below the phase out starting points, which are $75,000 MAGI for single filers and $150,000 MAGI for married couples filing jointly. Once income rises above those points, the deduction is reduced and eventually may drop to zero, so higher income seniors may not see a benefit.

Why is this deduction temporary through 2028. Under current law, it is scheduled to end after the 2028 tax year unless Congress extends it. In other words, it is available now, but it is not guaranteed to stay in place long term.

If you work with a tax professional, bring this up and ask how it applies to your specific situation. If you do not, consider using a reputable tax preparer who can confirm eligibility and estimate your real savings based on your exact income and filing status.

Robbyn Battles, Vice President of Senior Homes and Trust Sales, JohnHart Real Estate, senior real estate specialist, senior homeowner resources, trust sale real estate, inherited home sale, probate and estate home sale support, downsizing in La Crescenta, Montrose senior housing guidance, Glendale senior homeowners, Pasadena senior real estate, Altadena senior relocation, La Canada Flintridge senior home sale, multigenerational home planning, privacy focused home selling, senior transition real estate planning