Older Idahoans are benefiting from a new federal tax deduction that puts more money back in their pockets, according to U.S. Senator Mike Crapo.
The Working Families Tax Cuts legislation created a deduction of up to $6,000 for qualifying seniors, available to those aged 65 and older with incomes below certain thresholds. Married couples where both spouses meet the age requirement can claim up to $12,000.
The deduction applies to taxpayers with modified adjusted gross incomes under $75,000 for individuals or $150,000 for married couples filing jointly. Above those limits, the benefit phases out. Seniors can claim the deduction whether they itemize or take the standard deduction.
About 18 percent of Idaho’s population is 65 or older, meaning thousands of state residents qualify for the tax break.
Internal Revenue Service Chief Executive Officer Frank Bisignano told the Senate Finance Committee that seniors are receiving the largest dollar benefit this filing season from the tax law changes. Nationwide, more than 34 million seniors are claiming the deduction, with an average benefit exceeding $7,500.
AARP estimates the deduction could increase refunds for eligible older taxpayers by an average of about $670, though some will see larger amounts depending on their income and filing status.
The Council of Economic Advisors projects that roughly 88 percent of seniors receiving Social Security benefits will owe no federal income tax on those benefits under the new law.
The deduction is in addition to the increased standard deduction and the existing senior deduction of $2,000 for individuals or $3,200 for married couples.
Crapo, who chairs the Senate Finance Committee, said the tax relief helps seniors on fixed incomes cover basic expenses like food and health care. Many older Americans are working longer than expected or stretching retirement savings, he noted.
The Association of Mature American Citizens called the law a victory for retirees and working seniors, praising its approach to letting older Americans keep more of what they earned.