AP Wealth Management, LLC
The "Little Rock Senior Tax Shield" Checklist
1
Verify Your "Birthday Shield" & Filing Status
The Rule: You must be 65 or older by December 31, 2025, to claim the deduction on the return you are filing now in early 2026.
The Action: Ensure you are Filing Jointly if married. This is non-negotiable; “Married Filing Separately” disqualifies you from this specific $6,000–$12,000 benefit.
Local Tip: Remind Pulaski County viewers that this “stacks” on top of the existing Arkansas state exemptions for the first $6,000 of retirement plan or IRA distributions.
2
Calculate Your "Income Gap" (Phase-Out Check)
The Rule: The full $6,000 deduction begins to disappear once your Modified Adjusted Gross Income (MAGI) exceeds $75,000 (Single) or $150,000 (Joint).
The Action: Before the April 15 deadline, review your 2025 income. If you are just over the threshold, consider a last-minute traditional IRA contribution (if eligible) or health savings account (HSA) contribution to lower your MAGI and “unlock” more of that $6,000 deduction.
3
Perform a "Roth Conversion Test" for 2026
The Strategy: Because this new deduction lowers your taxable income significantly (essentially “shielding” $6,000–$12,000 more from the IRS), it creates a window to move money from a traditional 401(k) or IRA into a Roth IRA at a lower tax cost.
The Action: Use the “extra” room created by the deduction to convert high-tax future dollars into tax-free Roth dollars while staying in your current lower tax bracket.
Urgency: This deduction is currently scheduled to sunset after 2028, so retirees have a limited 3-year window to leverage this higher “shield” for conversions.
Have Questions about your Checklist?