OBBBA Senior Deduction Phase-Out

The One Big Beautiful Bill Act (OBBBA), signed in 2025, created an additional standard deduction of $6,000 per eligible taxpayer age 65 or older. Unlike the existing age-65 additional standard deduction, this one has an income phase-out that creates an implicit cliff.

The deduction phases out between $75,000 and $175,000 MAGI for single filers. Within that $100,000 band, every $1,000 of additional income reduces the deduction by $60.

The phase-out applies when MAGI exceeds $75,000 for single filers or $150,000 for MFJ (one spouse age 65+). If both spouses qualify, each gets their own $6,000 deduction with the same phase-out schedule applied to combined MAGI.

• Single filer phase-out: $75,000 → $175,000 MAGI
• MFJ (one spouse 65+) phase-out: $150,000 → 250,000 MAGI
• MFJ (both spouses 65+): each spouse's $6,000 phases out at $150,000+ MAGI
• Phase-out rate: $60 less deduction per $1,000 of MAGI within the band
• Effective marginal rate within the band: statutory rate + 6% (the rate you pay on the lost deduction)
• Sunset: provision is currently scheduled to expire 2028-12-31 unless extended

The maximum cost is the full deduction times your marginal tax rate. For a retiree in the 22% bracket, a $6,000 deduction is worth $1320 in tax savings. Losing it entirely costs that amount.

Within the phase-out band, the effective marginal rate is elevated by 6 percentage points. A retiree nominally in the 22% bracket faces a 28% effective rate on income within the $75,000–$175,000 band.