Tax saving tips for MN resident

• Minnesota offers a state tax subtraction for Social Security benefits depending on your Adjusted Gross Income (AGI) and filing status.
• For tax year 2024, if your AGI is below $82,190 (single/head of household) or $105,380 (married filing jointly), your federally taxable Social Security benefits are exempt from Minnesota state income tax.
  
  Here is a link for further details:  MN tax on social security 
  
  
  
  There are other planning tips available - once you reach age 65.
  
  TurboTax has a great tax reform calculator - here is the link:  Tax Reform Calculator 
  
  

Currently the federal taxation of Social Security benefits is calculated based on your provisional income, depending on your income level, and up to 50% or 85% of your Social Security benefits could be subject to federal taxes. This calculation has been key in calculating  your overall federal tax obligation.

The One Big Beautiful Bill does provide a special deduction for seniors. It's important to note that this is a deduction, not a tax credit, meaning it reduces taxable income rather than directly reducing the taxes owed.

Here’s a summary of the new senior deduction:

Eligibility and Amounts:

• A new $6,000 deduction is available for individuals aged 65 and older.  For married couples where both spouses are age 65 or older, the deduction increases to $12,000.

Purpose:

• This deduction is an addition to the standard deduction already available to taxpayers, further reducing the total taxable income.
• It applies to all taxable income, not just Social Security benefits.

Income Phase-Outs:

• The deduction starts to phase out for single filers with a modified adjusted gross income (MAGI) above $75,000.
• For married couples filing jointly, the deduction begins to phase out when their MAGI exceeds $150,000.
• The deduction is completely phased out for individuals with MAGI above $175,000 or married couples filing jointly with MAGI over $250,000.

Impact on Social Security Taxes:

• For many seniors, this deduction will lower their taxable income enough that their Social Security benefits may no longer be subject to federal income tax.
• The deduction can substantially cover the portion of benefits that would have been taxable under prior tax rules.

Limitations:

• This deduction does not entirely eliminate Social Security taxation for all seniors.
• Higher-income seniors who remain above the phase-out thresholds may still owe federal taxes on a portion of their Social Security benefits.

For more information see:

• OBBA of 2025 provisions

• OBBA Tax Deductions for Seniors

• Tax Law Changes from the Big Beautiful Bill

Please feel free to reach backout with any additional questions or concerns you might have!

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