With increasing living expenses and every trip to the drugstore or grocery store costing a bit more, many senior Americans are feeling pinched. If you’re a retired person living on a fixed income and asking yourself, “How am I ever going to make this dollar stretch?” good news from the Senate might be just what the doctor ordered. Politicians are proposing a $6,000 tax break just for seniors aged 65 or older—but, of course, only if you qualify based on income levels.”
Let’s work out how this would work for you and whether or not you’d qualify.
What is the senior citizen deduction?
The new proposal, or the “senior citizen deduction,” differs from previous tax relief.
It’s not an across-the-board flat deduction or individual exemption for everyone.
It’s available only to seniors who are 65 years of age and older.
The concept is to lower taxable income so retirees pay fewer federal taxes.
It’s meant to be temporary, in effect from 2025 through 2028.
So if you’re a retiree who’s struggling to keep up with inflation, this deduction could put some money back in your pocket.
Who qualifies for it?
To qualify for the \$6,000 deduction, you’ll need to meet a few simple conditions:
- You must be at least 65 years old by the end of the tax year.
- If you’re filing jointly, you and your spouse both need to be 65 or older.
- You’ll have to provide your Social Security number with your return.
- Your income (your Modified Adjusted Gross Income, or MAGI) needs to be within a specific limit.
What are the income limits?
This is a credit for low- to moderate-income seniors, and the restrictions on how much you can earn are tight.
The bad news is this:
- If you’re a single filer, the deduction starts phasing out when your MAGI is above $75,000.
- If you’re a joint filer, it’s $150,000.
- The deduction declines 6% for every $1,000 (or fraction of a thousand) by which your income is over the limit.
Example: You’re single and your MAGI is $76,000—a paltry $1,000 above the cut-line—you’d lose 6% of the $6,000 deduction, or $360.
How could this help you?
Come on: Even a few hundred dollars can make a big difference when you’re retired.
Here’s what you can benefit from with a $6,000 deduction:
Pay less taxes, potentially saving $600–$1,200 in your pocket depending on your tax rate.
Additional slack to spend on:
- Food and groceries
- Prescription medications
- Utility bills
- Gas and transportation
What’s next?
The legislation is still stuck in Congress before it’s passed into law, but the fact that the problem is being debated at all is a sign that legislators are paying attention to seniors’ concerns.
So if you’re age 65 or older—or close enough anyway—and on a fixed income, pay attention to this tax break. It could come when your budget needs it most.
Read this much later:
Bitcoin slumps on news of boming of Iran, Middle East tensions and inflations fears
