Seniors in the Workforce Tax Relief Act
H.R. 559, the Seniors in the Workforce Tax Relief Act, would create a new above-the-line deduction for taxpayers aged 65 or older. The deduction is designed to reduce adjusted gross income (AGI) for seniors, independent of whether they itemize deductions. For a single senior, the deduction starts at up to $25,000 and is phased out as AGI rises above $100,000, reaching zero once AGI hits $125,000. For joint filings or surviving spouses, the amounts are increased (base deduction up to $50,000 with AGI phase-out starting at $200,000 and ending at $250,000). There is a special rule if both spouses are 65 or older, which further adjusts the applicable base deduction. The deduction would apply to tax years beginning after December 31, 2024 and would expire after December 31, 2029. The bill also places the deduction in the Internal Revenue Code as an above-the-line deduction (added to Section 62) and redesignates the related code section for organizational purposes. In short, the bill seeks to make it easier for older workers to reduce their taxable income, with larger potential relief for couples where both spouses are seniors, and a sunset provision after 2029.
Key Points
- 1Creates a new above-the-line deduction for seniors (age 65+), meaning it reduces AGI regardless of itemized vs. standard deduction.
- 2Amounts (before phase-out) are:
- 3- Single senior: up to $25,000.
- 4- Joint returns or surviving spouse: up to $50,000 (with corresponding AGI thresholds and phase-outs).
- 5Phase-out mechanism:
- 6- Single senior: deduction is reduced in proportion to AGI above $100,000, with full phase-out reached at an AGI of $125,000 (i.e., 25,000 base reduced by the excess AGI relative to $100,000; capped at zero).
- 7- Joint/surviving spouse: same logic but using $200,000 as the AGI threshold and $50,000 as the base amount (phase-out ends at AGI $250,000).
- 8Special rule if both spouses are 65+ on a joint return: the base amount substitution is adjusted to reflect a $50,000 base in the calculation (effectively increasing the potential deduction for both-65+ households).
- 9Expiration: No deduction allowed for tax years beginning after December 31, 2029.
- 10Effective date: Applies to taxable years beginning after December 31, 2024; added to the code as an above-the-line deduction (Section 62) and phased in through related housekeeping changes.