#5 Unchanged Tax Thresholds and the $6,000 Senior Deduction
Federal income tax thresholds for Social Security benefits remain fixed at $25,000 in “combined income” for single filers and $32,000 for married couples filing jointly. Because these thresholds are not indexed to inflation, the 3.6% COLA increase may push more middle-income retirees over the limit in 2027, subjecting up to 50% or 85% of their benefits to federal tax.
However, under the 2025 tax law, taxpayers age 65 and older can claim a temporary additional deduction of up to $6,000 per eligible person ($12,000 for qualifying married couples filing jointly) for tax years 2025 through 2028. This bonus deduction phases out when modified adjusted gross income exceeds $75,000 for single filers or $150,000 for joint filers.
When planning your 2027 withdrawals from taxable 401(k) or traditional IRA accounts, consider how your total income interacts with both the Social Security tax thresholds and the senior deduction phaseout limits.
