How is Modified Adjusted Gross Income (MAGI) specifically calculated for the 2025 senior deduction on IRS forms?
Executive summary
The Modified Adjusted Gross Income (MAGI) used to determine eligibility and phase‑out of the 2025 senior deduction is calculated by starting with the taxpayer’s Adjusted Gross Income (AGI) from Form 1040 (line 11) and then adding back a small, specific set of excluded foreign or territorial incomes—principally the foreign earned income/housing exclusion and certain U.S. territory exclusions—rather than broad categories like nontaxable Social Security; the senior deduction itself phases out based on that MAGI at fixed thresholds and is reduced by 6% of the excess over the phase‑in point (per individual or joint thresholds) [1] [2] [3].
1. What “MAGI” means for the 2025 senior deduction: start with AGI
For the senior deduction the IRS directs taxpayers to begin with AGI—specifically the amount on line 11 of Form 1040, 1040‑SR, or 1040‑NR—and then adjust upward only for a few excluded foreign or territorial items; this is the authoritative starting point for the MAGI calculation tied to many tax benefits [1].
2. What gets added back to AGI for this deduction: foreign and territorial exclusions
Multiple tax advisers and IRS‑focused writeups agree that the MAGI for the senior deduction is AGI plus excluded foreign earned income and housing (Form 2555) and certain income excluded because of residency in U.S. territories such as Puerto Rico, Guam, American Samoa, and the Northern Mariana Islands—those excluded amounts must be added back to AGI to get MAGI for this specific deduction [2] [3] [4].
3. What is not added back: Social Security and common misconceptions
Contrary to some broader MAGI definitions used for other programs, nontaxable Social Security benefits are not treated as an add‑back for the 2025 senior deduction MAGI calculation according to practitioner forums and tax help threads that parsed the statute and practitioner guidance [5]; this distinction explains why MAGI definitions vary across different credits and programs [1].
4. How the MAGI number determines the deduction amount and phase‑out arithmetic
The senior deduction tops out at $6,000 per qualifying individual ($12,000 if both spouses qualify) and begins to phase out when MAGI exceeds $75,000 for single filers or $150,000 for married filing jointly; the reduction is computed as 6% of the amount by which MAGI exceeds the applicable threshold (examples and the 6% multiplier are shown repeatedly in tax‑prep and advisory sources) [6] [7] [8] [9].
5. Practical filing and form notes: where this shows up on returns
Advisors report the new deduction will be claimed on a newly created schedule (commonly referred to in commentary as Schedule 1‑A, Additional Deductions) attached to the federal return for 2025–2028, and tax software/filers should expect the MAGI add‑backs and the senior deduction calculation to flow through that schedule into the Form 1040 computation [2] [3].
6. Caveats, competing definitions and what the sources reveal about uncertainty
The IRS page describing MAGI emphasizes that MAGI definitions differ depending on the credit or deduction, so the MAGI used here is narrow—AGI plus specific excluded foreign/territorial income—while other programs add different items such as tax‑exempt interest or half of Social Security [1]; practitioner pieces and tax‑prep forums corroborate the foreign‑income add‑backs but also flag that taxpayers with unusual items should seek professional help or IRS tools because published guidance and forms were still being integrated into tax software and instructions as practitioners documented implementation [2] [3].