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Is it just me or do all things working class have far lower cutoffs than all things investment class? People with working class retirement income and a little deferred savings in RMD get little from the BBB. I, for one, got nothing.
People with working class retirement income get the ability to deduct $1K worth of charitable deductions without itemizing (starting in 2026). Only matters if their income is greater than the standard deduction.
Since their tax brackets are lower than the those of the wealthy, this deduction is of less value to them than to high earners. IMHO a fairer break would have been to give a tax credit of, say, 50% of the amount contributed, up to a $500 credit (50% of $1K).
With an increased standard deduction and an extra $6K "senior deduction", people with working class retirement income get the ability to convert more of their IRA tax free. That is, they can generate more income from conversions while still staying under the (now increased) standard deduction amount. This in turn gives them more flexibility in future years as the amount they must take from their T-IRA (RMD) is reduced.
Their tax bracket (assuming they are subject to taxes) is locked in at 10% or 12%. Without this legislation, roughly speaking the 12% bracket would have reverted to 15%. https://smartasset.com/taxes/trump-tax-brackets
Thanks @msf. Just stopped my “voluntary” tax withholding on SS benefits yesterday. But - gosh - the break appears to expire in ‘28 - So guess will have to remember to turn withholding back on in couple years. Setting up an online account with SS took a lot of patience - but finally got it to work..
Don't know exactly. That was Anna's phrasing. I figured that it is a modest (mid-range) SS income stream plus a small amount of interest on bank accounts and withdrawals as needed from a T-IRA. I suppose it could also include some part time income.
@hank "Just stopped my “voluntary” tax withholding on SS benefits yesterday. But - gosh - the break appears to expire in ‘28 - So guess will have to remember to turn withholding back on in couple years. Setting up an online account with SS took a lot of patience - but finally got it to work.''
Can you explain how you can turn off tax withholding "totally". I could see reducing , but not total turn off. With that said I should ask what % are you withholding. I think I'm at 22%.
Last year I had to send in $1K & change to IRS. I was thinking this -$6K deduction would even me out so to speak.
If one is in the 22% tax rate, $6000 times 22% equals $1320 in tax savings.
@larryB Just curious,,, what is “ working class retirement income?” That's a great question! Just reread comments & now more looking to do. Thanks larryB, Derf
@larryB I think were safe or so it seems. Income Limits and Phase-Out Rules for Seniors
The new deduction for seniors is subject to income limits:
Full Deduction: Available to single filers with modified adjusted gross income (MAGI) of $75,000 or less, and to joint filers with $150,000 or less. Phase Out: The deduction is gradually reduced at a rate of 6% of income above those thresholds. For example, a single filer age 65 with $100,000 of income would lose $1,500 of the $6,000 deduction, leaving $4,500. Cutoff: This new deduction is eliminated entirely once income reaches $175,000 for single filers and $250,000 for joint filers.
I have been filing Estimated Taxes forever and never thought of having social security withhold taxes. I do try to plan so that come April I owe nothing. I have been using a site called TAXCASTER during the year to estimate how we are doing. This year with all the changes I have found EFILE.Com which has something called “Tax Return Calculator Estimator for 2025.” May or may not be accurate. At least you have an idea what your Fed tax liability might be . YMMV.
@hank, Can you explain how you can turn off tax withholding "totally"?
@Derf - Ummm - I just stumbled through it after succeeding (over an hour or longer) to set up the online account. Once in the door it wasn’t hard. There’s an option somewhere to “Edit Voluntary Withholding”. After selecting that option you should see several withholding choices. Select “0” amount.
Here’s a cut & paste from a screen shot I captured: New Tax Withholding Rate: 0% (No withholding)
I had elected 15% in some prior year. Everybody’s tax situation is different. But I’ve always preferred to owe some $$ to the Feds April 15 rather than to get a refund which many prefer. Other than that I’ll refrain from commenting as not qualified on tax matters.
By paying by credit card that gets 2% back (e.g. Fidelity, Wells Fargo, Citibank) or more (BofA), the government pays me for paying online. Sure it's a petty amount but it's just a minor inconvenience. Others may not consider this worth the effort.
Break even (at 2%) is a quarterly estimate of $122.50. Below that you don't make back as much as you pay in processing fees (the min is $2.50). Above that and the pennies just keep flowing in
Comments
https://www.aaii.com/journal/article/336923-what-the-one-big-beautiful-bill-act-means-for-your-taxes
https://www.aaii.com/images/journal/336923-table-1.png
https://www.aaii.com/images/journal/336923-table-2.png
Looking for a tax calculator that incorporates all of these changes... especially for a 65+ youngster.
Since their tax brackets are lower than the those of the wealthy, this deduction is of less value to them than to high earners. IMHO a fairer break would have been to give a tax credit of, say, 50% of the amount contributed, up to a $500 credit (50% of $1K).
With an increased standard deduction and an extra $6K "senior deduction", people with working class retirement income get the ability to convert more of their IRA tax free. That is, they can generate more income from conversions while still staying under the (now increased) standard deduction amount. This in turn gives them more flexibility in future years as the amount they must take from their T-IRA (RMD) is reduced.
Their tax bracket (assuming they are subject to taxes) is locked in at 10% or 12%. Without this legislation, roughly speaking the 12% bracket would have reverted to 15%.
https://smartasset.com/taxes/trump-tax-brackets
Chickenfeed. But slightly above zero. Perhaps.
Can you explain how you can turn off tax withholding "totally". I could see reducing , but not total turn off. With that said I should ask what % are you withholding. I think I'm at 22%.
Last year I had to send in $1K & change to IRS. I was thinking this -$6K deduction would even me out so to speak.
If one is in the 22% tax rate, $6000 times 22% equals $1320 in tax savings.
That's a great question! Just reread comments & now more looking to do.
Thanks larryB, Derf
Income Limits and Phase-Out Rules for Seniors
The new deduction for seniors is subject to income limits:
Full Deduction: Available to single filers with modified adjusted gross income (MAGI) of $75,000 or less, and to joint filers with $150,000 or less.
Phase Out: The deduction is gradually reduced at a rate of 6% of income above those thresholds. For example, a single filer age 65 with $100,000 of income would lose $1,500 of the $6,000 deduction, leaving $4,500.
Cutoff: This new deduction is eliminated entirely once income reaches $175,000 for single filers and $250,000 for joint filers.
I see nothing about working income.
Here’s a cut & paste from a screen shot I captured: New Tax Withholding Rate: 0% (No withholding)
I had elected 15% in some prior year. Everybody’s tax situation is different. But I’ve always preferred to owe some $$ to the Feds April 15 rather than to get a refund which many prefer. Other than that I’ll refrain from commenting as not qualified on tax matters.
By paying by credit card that gets 2% back (e.g. Fidelity, Wells Fargo, Citibank) or more (BofA), the government pays me for paying online. Sure it's a petty amount but it's just a minor inconvenience. Others may not consider this worth the effort.
Break even (at 2%) is a quarterly estimate of $122.50. Below that you don't make back as much as you pay in processing fees (the min is $2.50). Above that and the pennies just keep flowing in
Have a good day, Derf
turbotax/tax-reform/