Healthcare Provider Update: Healthcare Provider for Southern California Edison: Southern California Edison (SCE) primarily utilizes Blue Shield of California as its healthcare provider for employees. This partnership enables the company to offer a variety of health insurance options to its workforce, including comprehensive coverage options tailored to meet the diverse needs of its employees. Potential Healthcare Cost Increases in 2026: As the healthcare landscape shifts, Southern California Edison employees may see a significant impact on healthcare costs in 2026. With projected record increases in insurance premiums-some states reporting hikes exceeding 60%-combined with the potential expiration of enhanced federal subsidies, many employees could face out-of-pocket premium spikes exceeding 75%. Factors contributing to this trend include rising medical costs and aggressive rate hikes from major insurers, which underline the importance of strategic planning for healthcare expenses as retirement approaches. Adapting to these changes is essential for maintaining financial stability and ensuring access to necessary healthcare services. Click here to learn more
'Many Southern California Edison employees underestimate how much “ghost taxes” can erode retirement income. Understanding these hidden thresholds today can help you make more thoughtful decisions for tomorrow’s financial well-being,' — Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.
'Many Southern California Edison employees are surprised by how quickly hidden taxes like AMT, NIIT, and IRMAA can reduce retirement income, making it important for retirees to stay informed and thoughtfully plan so these costs don’t catch them off guard.' — Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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The five “ghost taxes” that may unexpectedly impact retirement income.
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How these taxes can affect Southern California Edison employees and retirees.
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Strategies to better understand and prepare for these tax implications.
How Southern California Edison Employees Can Prepare for the Five “Ghost Taxes” That Could Haunt Retirement
There are several lesser-known surcharges and thresholds that may unexpectedly increase your tax bill in retirement, even if you already understand federal, state, and local tax obligations. These include the Alternative Minimum Tax (AMT), the Net Investment Income Tax (NIIT), the Medicare Income-Related Monthly Adjustment Amount (IRMAA), the Social Security “tax torpedo,” and the new senior deduction. Because many of these thresholds are not adjusted for inflation, they increasingly impact retirees, including those from Southern California Edison.
1. AMT: Alternative Minimum Tax
The AMT is a parallel tax system designed to make sure higher-income individuals pay at least a minimum amount of taxes. It has its own tax brackets, forms, and rules, with a top rate of 28%. 1 Some deductions available under the traditional tax system are limited under AMT rules.
For 2025, the AMT exemptions are:
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- $88,100 for single filers (phasing out at $626,350)
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- $137,000 for married couples filing jointly (phasing out at $1,252,700)
High income, exercising incentive stock options, large capital gains, or numerous itemized deductions may trigger AMT. Even though long-term capital gains receive preferential tax treatment, they can still reduce your AMT exemption. If AMT is paid in one year, a tax credit may be available in future years when AMT is not owed.
2. NIIT: Net Investment Income Tax
The NIIT applies a 3.8% tax on net investment income when modified adjusted gross income (MAGI) exceeds:
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- $200,000 for single filers
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- $250,000 for married couples filing jointly 2
This tax applies to dividends, interest, rental income, gains from home sales, and capital gains beyond exclusion limits. Withdrawals from 401(k)s and traditional IRAs are not directly taxed by NIIT, but they may increase MAGI and cause other investment income to be taxed.
Strategies to limit exposure include contributing to traditional retirement accounts, using health savings accounts (HSAs), and tax-loss harvesting. For instance, tax-loss harvesting allows you to use up to $3,000 in capital losses annually to offset ordinary income. 3
For individuals age 70½ or older looking to reduce MAGI, qualified charitable distributions (QCDs) may help. QCDs allow you to donate to qualified charities on a tax-free basis directly from your IRA, satisfying required minimum distribution (RMD) rules without bringing distributions into income. In 2025, up to $108,000 may be donated tax-free. 4
3. IRMAA: Income-Related Monthly Adjustment Amount
IRMAA adds a surcharge to Medicare Parts B and D premiums for higher-income retirees and is based on MAGI from two years prior.
For 2025, IRMAA applies when MAGI exceeds:
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- $106,000 for single filers
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- $212,000 for married couples filing jointly
Even a small increase above these limits can place retirees in a higher premium bracket. Tax-exempt interest from municipal bonds is included in MAGI for IRMAA purposes. Premiums and IRMAA can be deducted from Social Security payments or paid directly. Social Security allows individuals experiencing major life changes, such as retirement or death of a spouse, to request revised IRMAA calculations.
4. The Social Security “Tax Torpedo”
Social Security benefits may be taxable depending on “provisional income,” which includes:
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- Adjusted gross income
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- Non-taxable interest
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- One-half of Social Security benefits
If provisional income exceeds:
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- $34,000 for single filers
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- $44,000 for married couples filing jointly
...then up to 85% of Social Security benefits may be taxable. 5
Delaying Social Security up to age 70 increases benefits by 8% per year beyond full retirement age.
5. The 2025–2028 New Senior Deduction
From 2025 to 2028, individuals age 65 and older may qualify for a new senior deduction:
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- $6,000 for single filers
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- $12,000 for married couples filing jointly
This deduction phases out at:
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- $75,000 MAGI for single filers
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- $150,000 MAGI for joint filers
This is separate from the standard senior deduction, which currently adds $2,000 for individuals or $3,200 for married couples age 65 or older.
Need Help Navigating These Taxes?
Understanding how AMT, NIIT, IRMAA, Social Security rules, and senior deductions affect retirement income can be complex, especially for Southern California Edison retirees managing pensions, 401(k)s, and other investments. The Retirement Group can help you better understand how these tax considerations relate to your retirement planning. Call (800) 900-5867 for guidance.
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- Corporate Employees: 8 Factors When Choosing a Mutual Fund
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- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
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- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
Sources:
1. Tax Foundation. “ 2026 Tax Brackets .” 9 Oct. 2025.
2. Gravelle, Jane G., and Don J. Marples. The 3.8% Net Investment Income Tax: Overview, Data, and Policy Options . Congressional Research Service, 30 June 2023, crsreports.congress.gov/product/pdf/R/R41413.
3. IRS. ' Topic no. 409, Capital gains and losses .' 12 Sep. 2025.
4. Wealth Enhancement. ' 7 Tax Moves to Consider Before The End of The Year ,' by Mary Taliaferro, CFP. Nov. 5, 2025.
5. Investopedia. ' Provisional Taxes: What They Are and How They Work ,' by Julia Kagan. 4 Sep. 2025.
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