How is Modified Adjusted Gross Income (MAGI) calculated for the 2025 senior bonus phaseout?
Executive summary
The Modified Adjusted Gross Income (MAGI) used to determine the 2025 “senior bonus” phaseout is generally the taxpayer’s Adjusted Gross Income (AGI) with a few specific add‑backs — mainly certain tax‑excluded foreign and U.S. possession income — meaning for most filers MAGI will simply equal AGI [1]. The senior bonus phases out starting at $75,000 (single) / $150,000 (joint), is reduced by 6% of the MAGI excess over those thresholds, and is eliminated around $175,000 (single) / $250,000 (joint) [2] [3].
1. What “MAGI” means in this senior‑bonus context
For the senior bonus deduction the working definition of MAGI is AGI reported on Form 1040 plus a small set of statutory add‑backs: excluded foreign earned income (and related housing exclusion) and income excluded from certain U.S. possessions and Puerto Rico; absent those items, MAGI equals AGI for the vast majority of taxpayers [1] [4] [5].
2. What is explicitly added back to AGI
Multiple tax‑advisor summaries agree the add‑backs are limited and specific: the foreign earned income exclusion under IRC §911 (and housing exclusion tied to it) and excluded income sourced to Puerto Rico, Guam, American Samoa and the Northern Mariana Islands must be added back to AGI when computing MAGI for the senior deduction [1] [4] [5].
3. What is not added back (common confusions)
Common sources of confusion—non‑taxable Social Security benefits and tax‑exempt interest—generally are not treated as add‑backs for this MAGI calculation; community tax forums and practitioner write‑ups explicitly note that nontaxable Social Security is not added back for the senior bonus MAGI [6] [7]. If a taxpayer’s situation relies on other special MAGI rules (e.g., IRMAA or education credits), those are different constructs and should not be conflated with this senior‑bonus MAGI [7] [8].
4. How the phaseout math works in practice
The senior bonus is reduced by 6% of the amount by which MAGI exceeds the applicable threshold (6% × (MAGI − $75,000) for singles; 6% × (MAGI − $150,000) for joint filers), producing a dollar reduction to the $6,000 per‑person deduction; worked examples illustrate the approach (e.g., a single MAGI of $130,000 produces a $3,300 reduction, leaving a $2,700 senior deduction) [2] [9].
5. Phaseout endpoints and practical implications
Because the reduction is linear at 6% of the excess, the deduction disappears at about $175,000 for single filers and about $250,000 for joint filers (i.e., where 6% × excess equals the full $6,000), a fact emphasized by financial publications and firm advisories when outlining planning opportunities [3] [10].
6. Where the guidance comes from and its limits
The operational definition used by tax advisers and practitioner commentaries derives from the statutory text and contemporaneous practitioner guidance; several professional sources present the same AGI‑plus‑specific‑addbacks rule, but IRS published worksheets specific to this new senior bonus were not universally linked in those summaries, so taxpayers with unusual foreign‑income or territorial‑income situations should seek direct IRS guidance or professional help [1] [4] [8].
7. Practical next steps implied by the rule
Because MAGI for this purpose is mostly AGI, common year‑end planning—deferring taxable income, managing capital gains timing, or reconsidering use of the foreign earned income exclusion—can materially affect phaseout status; advisers and firm write‑ups flag these moves as meaningful for taxpayers near the thresholds [2] [9].