After several months of negotiating and some political theatrics along the way, the U.S. Senate recently passed President Donald Trump's "Big, Beautiful Bill," a sprawling piece of budget reconciliation legislation that includes trillions in tax cuts and funds to beef up border security, along with many other smaller provisions like the elimination of electric vehicle tax credits. The bill is likely to go down as one of Trump's major legislative achievements.
Since taking office, Trump has promised to scrap taxes on Social Security benefits to give retirees more purchasing power. The final version of the "Big, Beautiful Bill" isn't directly fulfilling this promise. However, it could still come with a very nice temporary tax break for those 65 or older -- as much as a $6,000 deduction for some. Let's take a look.
Senior tax deduction likely included, but details still being ironed out
The Senate passed the "Big, Beautiful Bill" by a single vote. However, before it can make its way to Trump's desk and officially into law, the bill will go back to the U.S. House of Representatives, which will look through and attempt to approve the Senate's changes.
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Among the provisions in the bill is a tax break that could result in as much as a $6,000 additional deduction for those 65 or older. According to The Wall Street Journal, the deduction could result in $1,600 in savings for a married couple earning $100,000. However, the House's version of the "Big, Beautiful Bill" only proposed a $4,000 deduction, which would lead to about $1,200 of savings for a married couple with $100,000 in combined income.
Still, the savings could be significant. The average monthly Social Security check for retirees in May was about $1,950 per month, or $23,400 annually. Assuming $1,600 in tax savings is the equivalent of close to 7% of average annual benefits this year. Also consider that the Social Security annual cost-of-living-adjustment (COLA) has only exceeded 7% once (2023) since 1984.
Who will get the deduction and for how long?
One thing to keep in mind is that many older Americans on Social Security -- particularly those with lower incomes -- already don't pay taxes on their benefits. Under current law, single filers are only subject to taxes on up to 50% of their benefits if their combined income (half of Social Security benefits plus adjusted gross income plus tax-exempt interest) exceeds $25,000.
Single filers must pay taxes on as much as 85% of their benefits if their combined income exceeds $34,000. For joint filers, the income thresholds are $32,000 and $44,000, respectively. The deduction could help retirees with combined incomes above these thresholds.
The tax break is for taxpayers who are 65 and older. Currently, 64% of members of this group who receive Social Security benefits don't pay Social Security taxes, according to Treasury statistics cited by the White House. If the Senate's $6,000 deduction is passed, 88% of that group would not pay income taxes on their Social Security benefits. That's a difference of over 14 million Americans. However, it's important for retirees to understand that the tax break is only being proposed between 2025 and 2028 and would not be permanent.
Furthermore, to qualify for the full deduction, single filers must make no more than $75,000 per year, while joint filers can make no more than $150,000. For retirees that have annual income over these thresholds, the deduction will get gradually smaller and then phase out completely for single filers making $175,000 or above and $250,000 or above for joint filers.
Retirees would be eligible for the tax deduction whether they file for the standard deduction or itemize deductions on their tax bill. The tax break would also be on top of an additional tax break people over the age of 65 already qualify for, which is $2,000 for seniors over the age of 65 that are married, and $1,600 for retirees who are not married and also not a surviving spouse.
