Social Security tax relief 2025: What changes now?

A July 4 tax bill signed by President Trump has sparked confusion over whether Social Security benefits are now tax-free. Despite campaign claims and a mass email from the Social Security Administration (SSA), the new law does not eliminate taxes on Social Security payments. Here’s what the bill actually does—and what it means for beneficiaries.

What the bill changes—and what it doesn’t

While the SSA claimed nearly 90% of recipients “will no longer pay income taxes” on their benefits, that’s not technically accurate. The bill does not repeal federal taxes on Social Security. Instead, it introduces a new $6,000 tax deduction for people 65 and older.

• The deduction applies only to older people with income under $75,000 (or $150,000 for couples).
• It phases out gradually for higher-income households and disappears entirely above $175,000 (or $250,000 jointly).
• The tax deduction is not linked to Social Security payments—it simply reduces taxable income for qualifying retirees.

When does the tax relief start?

The tax break kicks in for the 2025 tax year, meaning eligible older Americans will see changes when filing taxes in early 2026. It will be available annually through 2028 unless extended by Congress.

Is Social Security tax-free now?

No. Social Security benefits are still subject to federal income tax under current law. The new deduction may reduce or eliminate the tax burden for some retirees, but it does not make Social Security payments tax-free across the board.

Will Social Security taxes be eliminated?

President Trump has long promised to abolish taxes on Social Security benefits. However, any direct changes to the taxation of Social Security require 60 Senate votes, which the current Republican majority does not have. As a result, Social Security taxes remain in place, and the new law skirts that restriction by offering a general deduction instead.

How does this affect the Social Security program?

The deduction, while popular among middle-income retirees, is projected to accelerate the insolvency of Social Security. The Committee for a Responsible Federal Budget estimates the program could run out of funds by 2032, a year earlier than previously expected, due to reduced tax revenue.

Key takeaways

• Social Security taxes remain in effect; the bill does not repeal them.
• A $6,000 deduction helps people aged 65+ reduce taxable income.
• The deduction begins with 2025 income (filed in 2026) and lasts through 2028.
• The change may unintentionally weaken Social Security’s long-term funding.

What happens next?

As the deduction rolls out, many retirees may see modest tax relief, especially in the middle-income bracket. However, calls for full elimination of Social Security taxes will likely continue into future campaigns. Stay tuned to see if Congress revisits this issue—and how it might impact your benefits.