What Does the New Social Security Tax Deduction Mean for Seniors Over 65?
President Donald Trump signed his tax cut and spending package, dubbed “one big, beautiful bill,” into law July 4.
The Senate passed the package July 1 with a 51-50 vote, leaving Vice President JD Vance to break the tie, per NBC News. On July 3, the House passed the package with a 218-214 vote before it was sent to Trump the next day.
NBC News reports that the new package extends tax cuts that Trump introduced during his first term in 2017. The new package includes cuts to Medicaid, SNAP and clean energy funding, a temporary slash on taxes on tips and overtime pay, as well as hundreds of billions of more dollars dedicated to military spend and the president’s mass deportation plans.
The bill also included a new temporary tax deduction for Americans over 65, dubbed a “senior bonus,” per CNBC.
Here’s what to know about the new tax deduction for eligible senior taxpayers.
Will Seniors Over 65 Have to Pay Taxes on Social Security Benefits?
Yes, seniors over 65 will still have to pay taxes.
The “big, beautiful bill,” did not eliminate taxes on Social Security benefits, despite an announcement made by the Social Security Administration via email and on its website.
NBC News reported that the package did not remove federal taxes on Social Security, as budget reconciliation does not permit changes to be made to Social Security. The package instead included a temporary tax deduction for seniors 65 and older.
What Is the ‘Senior Bonus’?
The “senior bonus” is a term used to describe a tax deduction that some American taxpayers 65 and older may qualify for.
In lieu of eliminating taxes on Social Security benefits, under the new package, certain American taxpayers over 65 may receive an additional tax deduction. This temporary tax deduction will vary in amount depending on the modified adjusted gross income earned by eligible taxpayers.
The deduction is set to be in place for tax years 2025 through 2028, according to CNBC,
How Much Money Will Seniors Over 65 Get Back in Taxes?
According to the bill, certain American seniors who are 65 years old and above will be allowed a tax deduction of up to $6,000 per eligible taxpayer.
Those eligible would receive the full deduction if their modified adjusted gross income is up to $75,000 for a single filer, or $150,000 for those married and filing joint taxes.
CNBC reported that for taxpayers who are above the thresholds, the deduction would phase out at a 6% rate. The Tax Foundation reported that the deduction would be phased out for single filers making $175,000 and joint filers up to $250,000.