President Donald Trump’s sweeping “Big Beautiful Bill” includes a new $6,000 tax deduction aimed at easing the burden on seniors, but it falls short of eliminating federal income taxes on Social Security benefits — a promise Trump made on the campaign trail.
The bill, signed into law earlier this month, adds a deduction for Americans aged 65 and older. While the Social Security Administration (SSA) initially claimed the bill would eliminate taxes on benefits for nearly 90% of recipients, tax experts say that statement was misleading. The agency later walked back the claim, clarifying that the deduction may reduce — but not eliminate — taxes on benefits for many retirees.
“It’s simply not correct to say this bill eliminates taxes on Social Security for 90% of seniors,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center. “And it certainly doesn’t strengthen Social Security’s finances.”
What the Bill Actually Does
The legislation provides:
- An additional $6,000 tax deduction for seniors 65 and older.
- Eligibility phased out at incomes above $75,000 for individuals ($150,000 for couples).
- Availability from tax years 2025 through 2028, whether or not taxpayers itemize.
This deduction is “above the line,” meaning it lowers adjusted gross income (AGI) and could reduce how much of a senior’s Social Security benefits are taxable. However, only seniors within certain income ranges — especially middle-income retirees — are likely to see any real benefit.
“This isn’t a stimulus check,” Gleckman noted. “It’s a deduction, not a bonus. Many won’t see $6,000 back, just a smaller tax bill.”
Who Benefits?
Social Security taxes are based on combined income. Under current rules:
- Up to 85% of benefits can be taxed depending on income thresholds.
- These thresholds haven’t been adjusted for inflation, meaning more seniors face taxes each year.
While some seniors may see lower tax bills, many higher-income earners won’t qualify for the new deduction at all. Lower-income retirees, who already owe little or no tax on benefits, will also see no impact.
“People earning between $50,000 and $200,000 will benefit most,” Gleckman said. But even for them, the deduction may reduce taxes — not eliminate them.
Impact on Social Security’s Finances
Though marketed as tax relief for seniors, the bill could accelerate the depletion of the Social Security trust fund. The nonpartisan Committee for a Responsible Federal Budget estimates that reduced tax revenue from Social Security benefits could cost the program $30 billion annually.
That change would move up the projected insolvency date for the Social Security retirement trust fund to late 2032, from early 2033.
“The bill gives some short-term relief,” said CRFB President Maya MacGuineas, “but it comes at a long-term cost to Social Security’s solvency.”
Lawmakers may soon face difficult decisions: either raise taxes, cut benefits, or both — and the longer they wait, the tougher those choices will become.
