How to Calculate the Senior Deduction Phase-Out for 2026
To calculate the senior deduction phase-out, subtract the threshold ($75,000 for single filers, $150,000 for MFJ) from your MAGI, multiply the excess by 6%, and subtract that amount from the $6,000 maximum deduction. If the result is zero or negative, the deduction is fully phased out. Here is the formula with three worked examples covering different income levels and filing statuses.
The phase-out formula
The OBBBA senior bonus deduction uses a straightforward linear phase-out. The key variables are:
| Variable | Single / HoH | MFJ |
|---|---|---|
| Maximum deduction (per person) | $6,000 | $6,000 |
| Phase-out threshold | $75,000 | $150,000 |
| Phase-out rate | 6% | 6% |
| Full elimination point | $175,000 | $250,000 |
Step-by-step calculation
Follow these four steps:
- Find your MAGI: This is your adjusted gross income before the senior bonus deduction is applied. For most filers, MAGI equals AGI as shown on Form 1040.
- Subtract the threshold: If your MAGI is at or below the threshold ($75,000 single, $150,000 MFJ), stop here. You get the full $6,000.
- Multiply the excess by 6%: This is your reduction amount.
- Subtract the reduction from $6,000: The result is your deduction. If it is zero or negative, the deduction is fully eliminated.
In formula form: Deduction = $6,000 - (6% x (MAGI - Threshold)), with a floor of $0.
Example 1: Single filer with $90,000 MAGI
Consider a 68-year-old single filer with MAGI of $90,000 from pension and investment income.
Phase-out calculation
MAGI: $90,000
Threshold (single): $75,000
Excess: $90,000 - $75,000 = $15,000
Reduction: 6% x $15,000 = $900
Deduction: $6,000 - $900 = $5,100
This filer receives a reduced deduction of $5,100 instead of the full $6,000. The $900 reduction represents the 6% penalty on the $15,000 of MAGI above the threshold.
Example 2: MFJ couple with $180,000 MAGI
Consider a married couple, both age 70, with combined MAGI of $180,000 from Social Security, pensions, and a small rental property.
Phase-out calculation (MFJ, both qualifying)
MAGI: $180,000
Threshold (MFJ): $150,000
Excess: $180,000 - $150,000 = $30,000
Reduction per person: 6% x $30,000 = $1,800
Deduction per person: $6,000 - $1,800 = $4,200
Combined deduction (2 persons): $8,400
Each spouse gets a deduction of $4,200, for a combined $8,400. Note that the same phase-out percentage applies to both spouses' deductions based on the couple's shared MAGI.
Example 3: Single filer above the elimination point
Consider a 72-year-old single filer with MAGI of $170,000, which exceeds the elimination point of $175,000.
Phase-out calculation
MAGI: $170,000
Threshold (single): $75,000
Excess: $170,000 - $75,000 = $95,000
Reduction: 6% x $95,000 = $5,700
Deduction: $6,000 - $5,700 = $300 (fully eliminated)
Since the reduction ($5,700) exceeds the maximum deduction ($6,000), the deduction is zero. This filer's MAGI of $170,000 is well above the $175,000 elimination point.
Strategies to stay below the threshold
Retirees with MAGI near the phase-out threshold may be able to manage income timing to preserve more of the deduction:
- Roth conversions in lower-income years: Converting traditional IRA funds to a Roth before age 65 (when the deduction becomes available) reduces the traditional IRA balance that generates taxable RMDs later.
- Capital gain harvesting: Timing the sale of appreciated assets to avoid concentrating gains in a single year can help keep MAGI below the threshold.
- Qualified Charitable Distributions: QCDs from an IRA satisfy RMD requirements but are excluded from AGI, effectively lowering MAGI.
- Coordinating with other OBBBA deductions: If you also qualify for the tips or overtime deductions, note that those deductions reduce AGI before the senior bonus phase-out is calculated.
Use the senior bonus deduction calculator to model your specific income scenario, or see the OBBBA phase-out calculator for a broader view of how all four OBBBA deductions interact with your MAGI.