Don’t Let Ghost Taxes Haunt You: Tax Surprises to Watch For
October 29, 2025
Halloween is a season for spooks and surprises—but not when it comes to your finances. While a few good scares are part of the fun this time of year, no one wants to discover a hidden tax bill lurking in the shadows.
Most people have a general idea of what they’ll owe in federal, state, and local taxes. Yet there are several less-visible taxes and surcharges that can quietly creep up, catching even seasoned taxpayers off guard. Many of these were originally designed for high-income earners but haven’t kept pace with inflation—meaning they now affect more moderate households as well.
So before October 31st arrives, take a closer look at these five “ghost taxes” that could come back to haunt you—and a few ways to help keep them at bay.
1. The Alternative Minimum Tax (AMT)
The AMT is a separate tax calculation that ensures higher-income earners pay at least a minimum amount, even after deductions and credits. It runs parallel to the regular federal tax system and uses its own set of rules and rates (up to 28%).
For 2025, the AMT exemption is $88,100 for single filers and $137,000 for married couples filing jointly, with phaseouts beginning at $626,350 and $1,252,700, respectively.
Triggers: Large capital gains, numerous itemized deductions, or exercising incentive stock options.
Defense strategy: Adjust the timing of transactions that generate income or gains, and consider installment sales to spread out large profits over several years. If you do pay the AMT, you may be eligible for a future-year credit when it no longer applies.
2. The Net Investment Income Tax (NIIT)
The NIIT adds a 3.8% surtax on investment income for single filers with modified adjusted gross income (MAGI) above $200,000 and joint filers above $250,000. It applies to dividends, capital gains, rental income, and interest—though not to retirement withdrawals or municipal bond interest.
Defense strategy: Lower your MAGI by maximizing contributions to tax-advantaged accounts like 401(k)s, IRAs, and HSAs. If you’re subject to required minimum distributions (RMDs), consider qualified charitable distributions (QCDs) to reduce taxable withdrawals. Tax-loss harvesting—selling investments at a loss to offset gains—can also help minimize exposure.
3. The Medicare Income Surcharge (IRMAA)
If your income is above certain thresholds, you may owe extra premiums for Medicare Parts B and D. The IRMAA is based on your MAGI from two years prior—so even a one-time income spike (like selling property or executing a Roth conversion) can push you into a higher bracket.
For 2025, the surcharge begins at $106,000 for single filers and $212,000 for joint filers.
Defense strategy: Manage your income as you near Medicare age. Avoid large capital gains or conversions in those years, and consider charitable giving through QCDs to keep income lower. If your income recently dropped due to retirement or another life event, you can appeal the IRMAA adjustment.
4. The “Tax Torpedo” on Social Security
Up to 85% of your Social Security benefits may be taxable, depending on your provisional income (which includes your adjusted gross income, nontaxable interest, and half of your benefits).
Thresholds start at $34,000 for single filers and $44,000 for married couples filing jointly.
Defense strategy: Time your withdrawals strategically. Drawing from retirement accounts before taking Social Security can lower your later taxable income. Delaying benefits until age 70 not only increases your monthly payment but may help reduce the overall tax bite once you start collecting.
5. The New Senior Deduction Phaseout
A new $6,000 deduction ($12,000 for joint filers) is available from 2025–2028 for those age 65 and older. However, it begins to phase out at MAGI levels of $75,000 for singles and $150,000 for couples. For every additional dollar earned within the phaseout range, you’ll lose part of that deduction—potentially increasing your tax bill unexpectedly.
Defense strategy: Spread Roth conversions or other income-generating events over several years to stay below the phaseout range. As with other “ghost taxes,” consider tax-loss harvesting and QCDs to help manage taxable income.
Bottom Line
The best way to avoid these financial frights is through proactive planning. Talk with your financial advisor or tax professional about how these lesser-known taxes might affect you, and explore ways to minimize the impact before year-end.
Halloween should be filled with treats—not tax tricks. With a little foresight, you can keep those ghost taxes from haunting your returns.
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Disclosure:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.