Taking advantage of the One Big Beautiful Bill

jsyates1973

We want to take advantage of the additional $6,000 deduction (per 65+ person, married filing jointly) in 2025, and maximize the withdrawal within the 12% tax bracket.

To calculate how much I can withdraw within the 12% bracket it seems to me that I will add:

$94,300 (the maximum adjusted income within the 12% bracket)

$31,500 (the standard deduction for married couples over 65 filing jointly0

$12,000 ($6,000 additional deduction each for persons over 65)

Equalling $137,800. This is the maximum income that remains within the 12% bracket.

The income tax paid will be the maximum paid for the 12% bracket which is $10,852.

This makes sense to us but want to be sure we've taken everything into consideration.

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Comments

MatthewD

Hi jsyates1973,

I believe you have taken everything into consideration. The deduction is reduced for MAGI over $150,000 and is eliminated for MAGI over $250,000. So, you would still be eligible at $137,800 for the 12% tax bracket.

jsyates1973

https://community.freetaxusa.com/discussion/comment/6031#Comment_6031

Thanks so much!

money4nothing

Isn't $96,950 the top of the 12% bracket for 2025? $94,300 was correct for 2024.

And taxpayers over 65 also get a $1600 deduction (up from $1550 last year) each in addition to the new $6000 deduction. $31,500 is the MFJ deduction for everyone…not just 65+.

So I calculate it at $96,950+$31,500+$1,600+$1,600+$6,000+$6,000=$143,650.

MatthewD

Hi money4nothing,

Good observation. The IRS published the marginal rates for 2025. Here is the link: https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025

You have a little more room in 2025 to stay under the 12% tax bracket. Here are the brackets for 2025 up to 22%:
22% for incomes over $48,475 ($96,950 for married couples filing jointly).
12% for incomes over $11,925 ($23,850 for married couples filing jointly).
10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).

Careful planning will keep you in or under the 12% tax bracket. Keep in mind that the first $23,850 is taxed at 10%. If you have any LT capital gains they are also taxed at a lower rate. Your effective tax rate, which is the average percentage of your total income that you pay in taxes after all deductions and credits are accounted for. Your effective rate will be a little lower.