Traditional IRA distribution before 73

[Vkashtan]

I am 67 and would like to take advantage of the $6000 senior deduction available 2024-2028.

My idea is to start withdrawing from my Traditional IRA NOW to maximize this additional deduction over the next 4 years.

Knowing I need to use cash to pay the tax on these distributions, HOW DO I FIGURE the tax?  Is there a formula I can use?

Or should I just say "screw it" and wait until I'm 73?

[Katie-P]

The way to figure your tax liability on your traditional IRA distribution would be to figure out what your marginal income tax rate would likely be each year. You can use our Tax Calculator here. Once you fill it out, it will show you a federal income tax bracket.

Let's say that you fill out the form and it returns a result of 22% in the tax bracket area. You take out $10k from your traditional IRA, and have 22% withheld for federal income taxes, which is $2200. That's the calculation. If you also have a state income tax on retirement distributions, you'd want to consider a state withholding amount as well (the amount to withhold depends on your state's income tax rate(s)).

It is wise of you to consider working with your income over the next four years to maximize the senior deduction, but I want to clarify that taking an IRA distribution now does not maximize the senior deduction for you, given that you are 67 now. What it possibly would do is maximize it in the future, if doing so would then reduce your required minimum distribution to where it would put you below the $75k single/ $150k married MAGI threshold to take the full senior deduction. And that scenario would only apply if the senior tax deduction was extended past year 2028.

[KusyJ]

The $6,000 senior deduction beginning with tax year 2025 is actually a temporary personal exemption for individuals who are 65 years or older (subject to income limitations and identification requirements).

The personal exemption is in addition to the standard deduction for 2025. For a single filer over the age of 65, the standard deduction is added to the over-65 deduction and the temporary bonus deduction. 

The full amount for filing single (and not blind) would be as follows:

Standard Deduction: $15, 750

Extra Deduction for 65 and older: $2,000

Temporary senior exemption: $6,000

For a total deduction of $23,750

The full amount for filing jointly (and not blind) would be as follows:

Standard Deduction: $31,500

Extra Deduction for 65 and older: $3,200

Temporary senior exemption: $12,000

For a total deduction of $46,700

You need to consider your total income since the temporary senior exemption is limited by Adjusted Gross Income. The senior exemption of $6,000 shall be reduced (but not below zero) by 6% of the taxpayer’s modified adjusted gross income (MAGI) that exceeds $75,000 ($150,000 in the case of a joint return).

The standard deduction mentioned above will be indexed for inflation after 2025.

Add the amount you plan to withdraw from your traditional IRA to your other sources of income to produce total income. The enhanced standard deductions mentioned above (depending on your filing status) will be subtracted from your total income to produce your taxable income.

You can use this link to estimate your tax liability based on your situation and the tax brackets listed in the link: What are the 2025 tax brackets and rates (for filing federal tax returns in 2026)?