The Senior Deduction Phaseout: Planning Around RMDs, Roth Conversions and QCDs

The One Big Beautiful Bill Act added a temporary deduction for taxpayers 65 and older. For most eligible retirees it's automatic. What gets overlooked is how it phases out: within a certain income range, every added dollar of income also removes part of the deduction. That makes RMDs, Roth conversions and charitable giving decisions more expensive than your bracket alone suggests.

How it works

From 2025 through 2028, each taxpayer 65 or older can deduct an extra $6,000. A married couple who both qualify can deduct $12,000. You get it whether or not you itemize. Married couples must file jointly.

The deduction drops by 6% of modified adjusted gross income (MAGI) above $75,000 for single filers or $150,000 for joint filers. It's fully gone at $175,000 of MAGI for single filers and $250,000 for joint filers. Inside that range, the phaseout raises a 22% bracket to about 23.3% (24.6% if both spouses qualify) and a 24% bracket to about 25.4% (26.9% if both qualify).

RMDs

Required minimum distributions count fully toward MAGI and can't be avoided. They set your starting income for the year. They also drive Social Security taxation and Medicare IRMAA premiums.

Roth conversions

Conversions add to MAGI, so they carry the extra 6% cost (12% if both qualify) while you're in the phaseout range. For example, a couple, both 66, with $160,000 of MAGI who convert $50,000 lose $6,000 of deduction. That's about $1,320 of added tax at 22%, or roughly 2.6% of the conversion. It's worth budgeting for, but rarely a reason to skip a conversion that makes sense otherwise. A few guidelines:

• Take the RMD first, because RMD dollars can't be converted.
• Once MAGI is above the phaseout range, further conversions don't carry the added cost.
• Waiting until the deduction expires in 2029 avoids the phaseout, but a growing pre-tax balance means larger future RMDs.
• Check IRMAA, Social Security and the 3.8% net investment income tax thresholds too. IRMAA uses your income from two years earlier.

QCDs

Starting at age 70½, a qualified charitable distribution sends IRA money directly to charity, up to $111,000 per person in 2026. It counts toward your RMD and is excluded from income. That lowers MAGI and can restore part of the senior deduction. For a retiree in the 22% bracket who

stays in the phaseout range, a QCD saves about 23 cents in tax per dollar given (about 24.6 cents if both spouses qualify). Starting in 2026, itemizers can deduct charitable gifts only above 0.5% of AGI, which makes QCDs even more attractive by comparison.

The bottom line

Each year, estimate your MAGI, cover your RMD (using QCDs for planned gifts), and then size any Roth conversion knowing which thresholds it will cross. Your HHM advisor can help you plan for these rules through 2028.