The “Big, Beautiful Bill” has been the talk of the United States these past few weeks. Now, Donald Trump wants to follow through on his promise to eliminate Social Security taxes. As such, Social Security taxes have not been clearly eliminated; however, due to the proposed changes in the Big, Beautiful Bill, a new analysis has determined that a large portion of seniors will no longer be required to pay taxes on their Social Security benefits.
This doesn’t mean that President Trump is not keeping his word
Donald Trump has repeatedly promised to eliminate taxes on Social Security benefits. The proposed legislation makes no mention of eliminating taxes on Social Security benefits. This, however, does not mean that President Trump is not keeping his word. A recent analysis by the Council of Economic Advisers has revealed that a significant fraction of seniors receiving Social Security benefits will not be required to pay taxes on their benefits under the new Big Beautiful Act.
“88% of seniors receiving Social Security benefits will pay no tax on their benefits under the OBBB”
According to the White House, “88% of seniors receiving Social Security benefits will pay no tax on their benefits under the OBBB as a result of their total deductions exceeding their taxable Social Security benefits.” This, however, does not necessarily mean that taxes on Social Security have been eliminated entirely. Instead, it deals more with the threshold of taxable income.
“It’s simply not accurate to claim that this bill includes a provision that will eliminate the tax”
Thus, while the Social Security Administration memo claimed that the law helps protect Social Security, experts point out that the provisions weaken the program’s funding by reducing the tax revenue it receives. “It’s simply not accurate to claim that this bill includes a provision that will eliminate the tax on Social Security benefits for 90% of the population,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.
For example, people with combined incomes between $25,000 and $34,000 may be subject to tax on up to 50% of their Social Security benefits. If their combined income exceeds $34,000, they may be subject to tax on up to 85%.
Benefits: How It Works
The new tax package includes an additional deduction of up to $6,000 for seniors 65 and older. While the additional deduction for seniors is referred to as a bonus in the legislative text, it is technically a deduction that reduces the amount of taxable income. It’s important to note that this doesn’t necessarily mean seniors will receive a $6,000 bonus check in the mail or in their tax refunds.
For qualifying taxpayers, the senior deduction could reduce, rather than eliminate, their taxes on benefits, Gleckman said. The Urban-Brookings Tax Policy Center estimates that less than half of seniors will benefit from the senior deduction, she added. Even those who do benefit won’t necessarily see zero taxes; they’ll just see lower taxes, Gleckman said.
“It could confuse and anger many seniors, who expect not to pay taxes on their benefits”
Garrett Watson, director of policy analysis at the Tax Foundation, said that “combining the tax deduction with the claim that there will be no tax on Social Security could confuse and anger many seniors, who expect not to pay taxes on their benefits,” adding, “While the deduction offers some relief to seniors, it falls far short of completely eliminating the tax on their benefits.”
We will continue to provide updates and, above all, we urge those interested to frequently check the official state websites for updates. If you have any questions, the best option is to contact the Social Security Administration to avoid headaches or incorrect payments at the end of the month.
