By Elizabeth O'Brien | Sunday, July 13
Fun fact: there is no uniform definition of MAGI. Your modified adjusted gross income depends on the context. For retirees, your MAGI for Medicare surcharge purposes is different from your MAGI for the purpose of taking the new, $6,000 senior deduction in the One Big Beauitful Bill Act. The former includes muni bond income, the latter doesn't.
To claim the full senior deduction, your income can't exceed $75,000 for a single filer and $150,000 for married couples filing jointly. This raises planning opportunities for people on the cusp. Maybe hold off on a Roth conversion that would push your income above the threshold, for example, or reduce your work hours so as not to exceed the limit.
Notably absent from the new law? A tax break on Social Security benefits. President Trump campaigned on eliminating taxes on Social Security, but it would take bipartisan support in Congress to make that happen. The senior deduction isn't nearly as sweeping, but it does reduce taxes on Social Security for certain recipients through 2028.
