‘Senior bonus’ explained: What Trump's budget bill means for Social Security taxes
Some older Americans may see additional tax relief if the “Big Beautiful Bill” becomes law.
The big bill seeks to make existing tax rates and brackets permanent, while also temporarily adding new ones Trump campaigned on – no taxes on tips, overtime pay, along with a bigger $6,000 deduction in the Senate draft for seniors who earn no more than $75,000 a year.
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Americans aged 65 and over may qualify for the “senior bonus,” which both the Senate and House have passed their versions of.
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What is a ‘senior bonus’?
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The Senate bill offers a deduction amount to up to $6,000 per eligible taxpayer. Meanwhile, the House’s bill offers $4,000.
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Now it’s up to both chambers to decide how large that new temporary deduction will be, which will be in effect from 2025 through 2028, according to the proposals. This would be on top of the standard deduction that people above age 65 already receive.
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In this photo illustration, a Social Security card sits alongside checks from the U.S. Treasury on October 14, 2021 in Washington, DC. (Credit: Kevin Dietsch/Getty Images) <!–>
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This means the wealthiest households could see a $12,000 increase, while the bill would cost the poorest people $1,600 a year, according to the nonpartisan Congressional Budget Office.
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Middle-income taxpayers would see a tax break of $500 to $1,500, CBO said.
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Who will get ‘senior bonus’?
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Dig deeper:
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Eligible taxpayers would get the full deduction if their modified adjusted gross income is up to $75,000 if single or $150,000 if married and filing taxes jointly.
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The deduction would phase out at a 4% rate in the House bill when modified adjusted gross income exceeds $75,000 for single filers and $150,000 for joint filers. The Senate bill accelerates the phaseout, increasing it to 6%.
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Trump on eliminating all income taxes on Social Security
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The backstory:
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During the 2024 election campaign, Trump promised that he would eliminate all income taxes on Social Security. The House and Senate “Big, Beautiful” reconciliation bills do not include this provision, but they would provide a new additional standard deduction for seniors.
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RELATED: House Republicans push for final vote on Trump’s spending bill
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The taxation of Social Security benefits is a somewhat recent phenomenon, according to the TaxFoundation.org It was introduced as part of the 1983 amendments to shore up the Social Security trust fund, which at the time was facing insolvency, much like today. Unlike other types of income, the revenues generated from the taxation of Social Security benefits are earmarked specifically for the Social Security and Medicare trust funds.
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The Source: This story was reported from Los Angeles. The Associated Press, FOX News, the Tax Foundation and CNBC contributed.