Maximize Your Retirement with Senior Financial Services Inc New Legislation and its Effects on Retirement Planning Part 4 (Senior earning $100,000.00)

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Income Components

Let’s assume the senior’s $100,000 income comes from:

Source	Annual Amount
Social Security benefits	$35,000
401(k)/IRA withdrawals	$50,000
Dividends/interest	$15,000
Total	$100,000

Note: Social Security benefits are partially taxable based on combined income (MAGI + 50% of Social Security).

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 Standard Deduction & Senior Deduction

Step 1: Standard Deduction

• Single filer in 2025: $15,750
• Additional senior deduction (age 65+): $6,000
• Total deduction: $21,750

This reduces taxable income:

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 Taxable Social Security

• The IRS taxes Social Security only if “combined income” exceeds thresholds ($25,000 single, $32,000 married).
• Combined income formula: MAGI + 50% of Social Security
• MAGI here = 50k + 15k = 65k
• 50% of SS = 17,500
• Combined income = 65k + 17.5k = 82,500

Step 2: Determine taxable portion of Social Security

• For a single filer, 50% of SS becomes taxable if combined income > $25,000
• 85% of SS becomes taxable if combined income > $34,000
• Here combined income = $82,500 → 85% of $35,000 is taxable = 29,750

So taxable Social Security = $29,750, but we must subtract the senior deduction portion already applied.

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 Taxable Income Calculation

• Other income: $50,000 (IRA) + $15,000 (dividends/interest) = $65,000
• Add taxable SS: 29,750 → $94,750
• Subtract deductions: 21,750 → $73,000 taxable income

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 Federal Tax Estimate (2025 brackets)

Assuming 2025 tax brackets similar to TCJA:

Bracket	Rate
Up to 11,000	10%
11,001–44,725	12%
44,726–95,375	22%
…	…

• Apply rates roughly:

1. First 11,000 × 10% = 1,100
2. Next 33,725 (44,725–11,000) × 12% = 4,047
3. Remaining 28,275 (73,000–44,725) × 22% = 6,221

Total federal income tax ≈ 1,100 + 4,047 + 6,221 = 11,368

Without the senior deduction of $6,000, taxable income would be $79,000 → tax ≈ $12,581.
So senior deduction saves ≈ $1,200.

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 Social Security Tax Relief

• Social Security is partially taxed, but thanks to the enhanced deduction, the senior keeps some of that income untaxed.
• Without the $6,000 senior deduction, taxable SS would slightly increase the tax owed → the deduction directly reduces the amount taxed on SS.

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 Bottom Line for This Senior

Item	Amount
Total income	$100,000
Standard + senior deduction	$21,750
Taxable income	$73,000
Estimated federal tax	$11,368
Tax savings from senior deduction	~$1,200