I received an email from Social Security Administration on July 3, applauding the new 2025 Trump tax law — One Big Beautiful Bill Act. The email said,
The new law includes a provision that eliminates federal income taxes on Social Security benefits for most beneficiaries, providing relief to individuals and couples.
I read the One Big Beautiful Bill Act. This part is not true. The new 2025 Trump tax law doesn’t eliminate federal income tax on Social Security benefits. Social Security is still taxable just as before.
Temporary Senior Deduction
The email from Social Security Administration continued to say:
Additionally, it provides an enhanced deduction for taxpayers aged 65 and older, ensuring that retirees can keep more of what they have earned.
This part is true, but the email failed to mention that the enhanced deduction is only temporary, and it has nothing to do with Social Security anyway.
One Big Beautiful Bill Act created a new $6,000 senior deduction, available only from 2025 through 2028, to seniors 65 and older during those years. It doesn’t matter whether you’re receiving Social Security or not. It doesn’t matter whether you’re even eligible for Social Security or not.
Unrelated to Social Security
If you’re 62 and receiving Social Security, you don’t qualify for this new senior deduction because you’re not 65 yet. Your Social Security is taxable just as before.
If you and your neighbor are both 65, and you’re receiving Social Security but your neighbor isn’t eligible for Social Security because they didn’t pay into it, both of you qualify for this new senior deduction. If you and your neighbor have the same income outside Social Security (pension, interest, dividends, capital gains, etc.), you’ll pay higher taxes than your neighbor when you add your taxable Social Security benefits on top.
If you’re 65 this year and you’re delaying your Social Security, you still qualify for this new senior deduction. When you claim your Social Security next year at 66, your taxes will increase because Social Security is taxable just as before the 2025 Trump tax law.
No Change to AGI
The new senior deduction goes after the standard deduction or itemized deductions. It doesn’t lower your AGI. It doesn’t affect anything that qualifies based on the AGI, for example, Medicare premiums under IRMAA. It doesn’t lower state taxes.
No Change to Tax on Social Security
The new senior deduction is just an extra tax benefit for seniors. It has nothing to do with Social Security. It doesn’t remove taxes on Social Security. The new extra tax benefit may be worth more or less than the tax on your Social Security benefits. You have the new tax benefit on one side and the tax on Social Security on the other side. The two are completely unrelated.
It’s like some people saying they picked up $5 on the street and therefore their coffee is free. The two things have nothing to do with each other. You don’t have to buy coffee after picking up $5. The coffee still costs the same whether you picked up $5 or not. The coffee may be more or less than $5. It isn’t free.
Please use my calculator How Much of Your Social Security Benefits Is Taxable? to find out how much of your Social Security benefits is taxable. The new 2025 Trump tax law didn’t change any of that calculation.
Income Phaseout
Not only is the new senior deduction temporary, but it also phases out as your income goes up. You get the full $6,000 deduction if you’re single and your modified adjusted gross income is $75,000 or less ($150,000 or less for married filing jointly; you get $0 deduction if you’re married filing separately).
As your income goes up, the deduction is reduced by 6% of any additional income above those thresholds. The deduction disappears when your income is $175,000 or more if you’re single, $250,000 or more if you’re married filing jointly and only one of you is 65, or $350,000 if you’re married filing jointly and both of you are 65.
Single
| Income | Senior Deduction |
|---|---|
| $75,000 or less | $6,000 |
| $85,000 | $5,400 |
| $95,000 | $4,800 |
| $105,000 | $4,200 |
| $115,000 | $3,600 |
| $125,000 | $3,000 |
| $135,000 | $2,400 |
| $145,000 | $1,800 |
| $155,000 | $1,200 |
| $165,000 | $600 |
| $175,000 or above | $0 |
Married Filing Jointly, One Person Is 65+
| Income | Senior Deduction |
|---|---|
| $150,000 or less | $6,000 |
| $160,000 | $5,400 |
| $170,000 | $4,800 |
| $180,000 | $4,200 |
| $190,000 | $3,600 |
| $200,000 | $3,000 |
| $210,000 | $2,400 |
| $220,000 | $1,800 |
| $230,000 | $1,200 |
| $240,000 | $600 |
| $250,000 or above | $0 |
Married Filing Jointly, Both Are 65+
| Income | Senior Deduction |
|---|---|
| $150,000 or less | $12,000 |
| $160,000 | $11,400 |
| $170,000 | $10,800 |
| $180,000 | $10,200 |
| $190,000 | $9,600 |
| $200,000 | $9,000 |
| $210,000 | $8,400 |
| $220,000 | $7,800 |
| $230,000 | $7,200 |
| $240,000 | $6,600 |
| $250,000 | $6,000 |
| $260,000 | $5,400 |
| $270,000 | $4,800 |
| $280,000 | $4,200 |
| $290,000 | $3,600 |
| $300,000 | $3,000 |
| $310,000 | $2,400 |
| $320,000 | $1,800 |
| $330,000 | $1,200 |
| $340,000 | $600 |
| $350,000 or above | $0 |
[Image Credit: Google Gemini]
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