May I claim a subtraction for dividend/interest/capital gains if I am a senior citizen?

Senior Citizens age 77 and older may subtract dividend, interest and capital gains to the extent they are included in adjusted gross income.

The subtraction is limited to $13,712 for single filers and to $27,424 for joint filers for 2023. These limits must be reduced by any subtraction for retirement benefits.

Example 1: Eligible for full subtraction;

Senior Citizen filing a single return with $5,000 pension subtraction is only allowed an interest subtraction of $8,712 ($13,712 - $5,000 = $8,712).

Mary is 77 years old and has pension of $5,000 and interest income of $4,000.

Mary can subtract all $4,000 of interest income.

Example 2: Eligible for partial subtraction;

Senior Citizen filing a single return with $8,000 pension subtraction is only allowed an interest subtraction of $5,712 ($13,712 - $8,000 = $5,712).

Mary can only subtract $5,712 of interest income. 

Example 3: Not eligible for subtraction;

Senior Citizen filing a single return with $17,000 pension subtraction is not allowed an interest subtraction.

Mary is 77 years old and has pension of $17,000 and interest income of $4,000.

Mary's allowable dividend/interest/capital gains deduction is zero.