OBBBA Bonus Senior Deduction (IRC §151(f))
A temporary additional deduction of $6,000 per qualifying individual age 65 or older, available for tax years 2025 through 2028. Unlike the existing age-65+ additional standard deduction, this bonus applies whether the taxpayer itemizes or takes the standard deduction. It phases out at higher income levels.
How it works
The One Big Beautiful Budget Act (OBBBA) added IRC §151(f), creating a temporary bonus senior deduction of $6,000 per qualifying person age 65+. The deduction reduces taxable income on top of — not instead of — the standard deduction or itemized deductions the taxpayer otherwise claims. A phase-out applies above income thresholds that vary by filing status. The deduction is fixed by statute and not adjusted for inflation. It applies to tax years 2025 through 2028 and sunsets automatically in 2029. No advisor input is required: the engine determines qualifying persons and applies the phase-out from client and co-client birth years in each projection year.
1. Determine the active tax years
The bonus senior deduction only exists for tax years 2025, 2026, 2027, and 2028. For any projection year before 2025 or after 2028, the deduction is $0 and the remaining steps are skipped.
Active if: 2025 <= taxYear <= 2028 Otherwise: $0 (no deduction)
Example: A 2024 projection year: no deduction applies. A 2026 projection year: proceed to qualifying-person check.2. Count qualifying persons
A person qualifies if they are age 65 or older by the end of the tax year. Age is determined the same way as the existing IRC §63(f) age-65+ additional standard deduction: (taxYear - birthYear). For MFJ filers, both the client and co-client are evaluated independently. For all other filing statuses, only the primary client age is counted. If birth year is unknown for a person, they do not count as qualifying.
Age = taxYear - birthYear Qualifies if: age >= 65 Qualifying persons: MFJ: count client (if age >= 65) + co-client (if age >= 65) — 0, 1, or 2 Single / HOH / MFS: count client only — 0 or 1
Example: MFJ couple: client born 1955 (age 70 in 2025), co-client born 1962 (age 63 in 2025). Client qualifies; co-client does not. Qualifying persons = 1.3. Calculate allowable amount before phase-out
Each qualifying person contributes $6,000 to the allowable deduction. A couple where both spouses are 65+ receives $12,000.
Allowable Before Phase-Out = qualifyingPersons × $6,000 Fixed amounts (not inflation-adjusted): 1 qualifying person: $6,000 2 qualifying persons (MFJ, both 65+): $12,000
Example: MFJ couple, both 65+: 2 × $6,000 = $12,000 allowable before phase-out.4. Apply the income phase-out
The deduction phases out at a rate of 6% of MAGI over the applicable threshold. MAGI for this provision equals AGI plus foreign income exclusions under IRC §§911, 931, and 933. Stratum does not model foreign income exclusions, so MAGI is treated as AGI. Phase-out start thresholds: Single / HOH / MFS: $75,000 MFJ: $150,000 Full phase-out points (where the deduction reaches $0): Single, 1 qualifying person ($6,000 deduction): $175,000 MAGI MFJ, 1 qualifying person ($6,000 deduction): $250,000 MAGI MFJ, 2 qualifying persons ($12,000 deduction): $350,000 MAGI
Phase-out reduction = max(0, MAGI − threshold) × 0.06 Bonus Senior Deduction = max(0, allowableBeforePhaseOut − phaseOutReduction)
Example: MFJ couple, both 65+. MAGI = $200,000. Allowable = $12,000. Excess MAGI = $200,000 − $150,000 = $50,000. Reduction = $50,000 × 6% = $3,000. Bonus Senior Deduction = $12,000 − $3,000 = $9,000.5. Apply the deduction to taxable income
The bonus senior deduction reduces taxable income after the standard/itemized selection and before the QBI deduction calculation. It is additive to whichever deduction method the taxpayer uses — it does not replace or reduce the standard deduction or itemized deductions. Because the QBI deduction is capped at 20% of taxable income (before QBI), and this bonus reduces that taxable income, a senior with qualifying business income may see a modestly smaller QBI deduction as an indirect effect. This is correct mechanical behavior under §199A — not a modeling error.
Taxable Income = AGI − max(Standard Deduction, Itemized Deductions) − Bonus Senior Deduction // applied here − QBI Deduction // QBI cap uses taxable income after bonus
Example: Single client, age 67, itemizing. AGI = $90,000. Itemized deductions = $20,000. Phase-out reduction = ($90,000 − $75,000) × 6% = $900. Bonus Senior Deduction = $6,000 − $900 = $5,100. Taxable Income = $90,000 − $20,000 − $5,100 = $64,900.
Real-world context
How this differs from the existing age-65+ additional standard deduction
Clients who are 65+ already receive an additional standard deduction under IRC §63(f): $2,000 per qualifying person (Single/HOH) or $1,600 per person (MFJ/MFS) in 2025. That additional amount only applies when the taxpayer takes the standard deduction — not when they itemize. The OBBBA bonus senior deduction is different: it applies whether the client itemizes or takes the standard deduction. A senior who itemizes gets zero benefit from the §63(f) addition but still receives the full §151(f) bonus (subject to phase-out). A senior who takes the standard deduction receives both.
No advisor configuration needed
This deduction is fully automatic. Stratum reads client and co-client birth years from the household record, determines qualifying ages in every projection year, and applies the phase-out from projected AGI. As a client ages through 65 mid-projection, the deduction activates in that year. As income grows past the phase-out threshold, the deduction shrinks automatically. There is no field to enter, no strategy to enable, and no toggle to set.
Phase-out as a planning signal
For MFJ clients where one spouse is 65+ (threshold $150,000), every dollar of MAGI above $150,000 reduces the deduction by $0.06. At a 22% marginal rate, losing $0.06 of deduction costs roughly $0.013 of additional federal tax per dollar above the threshold — a modest but real increase in the effective marginal rate during the phase-out range. Advisors managing income near the threshold through Roth conversions, harvesting decisions, or income timing can sometimes preserve a larger portion of the deduction. The diagnostic breakdown in TaxCalculationBreakdown.bonusSeniorDeduction shows the exact MAGI used, threshold, and reduction amount for each projection year.
QBI interaction
The §199A QBI deduction is capped at 20% of taxable income (before QBI). Because the bonus senior deduction reduces taxable income, it also lowers this cap. For a senior with significant pass-through business income, the bonus deduction and QBI deduction partially offset each other: the bonus reduces taxable income, which tightens the QBI cap. In most cases the net effect is still favorable — the full bonus deduction exceeds the QBI that gets displaced — but advisors with clients who have both QBI and a qualifying age should review the QBI breakdown in the tax detail section.
Sunset in 2029
The deduction expires automatically after tax year 2028. Projections will show the deduction active through 2028 and $0 from 2029 onward. This appears as a visible step-up in taxable income and federal tax in the projection — not a modeling error, but the planned statutory expiration. If Congress extends the provision, Stratum constants will be updated to reflect the new active years.
What drives the result
Determines whether the client is age 65 or older in each projection year. If the birth year is missing, the client is treated as non-qualifying and receives no bonus deduction.
Client born 1960 turns 65 in 2025 — qualifies starting in 2025. Client born 1965 turns 65 in 2030 — receives no deduction during the 2025-2028 active window.
For MFJ filers, the co-client is evaluated independently. If both spouses are 65+, the household receives $12,000 (before phase-out) instead of $6,000.
MFJ: client age 68, co-client age 63. Only the client qualifies — $6,000 allowable. Two years later when the co-client turns 65: $12,000 allowable.
MAGI drives the phase-out calculation. Higher income erodes the deduction at 6% per dollar above the applicable filing-status threshold.
Single client, one qualifying person. MAGI $75,000: full $6,000 deduction. MAGI $125,000: $3,000 deduction ($50k × 6% = $3k reduction). MAGI $175,000: $0, fully phased out.
Assumptions
- Active for tax years 2025 through 2028 only (sunsets 2029 by statute)
- Per-person amount is $6,000, fixed by statute and not inflation-indexed
- MAGI for phase-out purposes equals AGI (foreign income exclusions under IRC §§911/931/933 are not modeled)
- Age determination: taxYear - birthYear (same method as IRC §63(f) additional standard deduction)
- For MFJ filers, both spouses are evaluated independently; the combined deduction is the sum of each qualifying spouse contribution
- For all filing statuses other than MFJ, only the primary client age is counted
- If a person birth year is not entered, they are treated as non-qualifying for this deduction
Limitations
- Does not model foreign income exclusions (IRC §§911/931/933) in the MAGI calculation — uncommon in the typical advisor client base and Stratum does not collect foreign income data
- Statutory amounts are fixed at $6,000 per person; if Congress amends the per-person amount or phase-out thresholds before 2029, Stratum's constants would need to be updated to match
- Sunset in 2029 is automatic — if Congress extends the provision, projection years 2029+ will show $0 until the constants are updated to reflect the new active years
Related
This page explains how Stratum models this calculation. It is educational material for financial professionals, not tax or legal advice, and tax law changes. Verify current figures against primary IRS sources before relying on them with a client.