Beneficiaries of Social Security could be on the cusp of receiving a huge tax deduction if the draft of tax proposals brought forward by House Republicans passes into law.
Here is what you need to know.
Potential tax break for Social Security beneficiaries
The “One, Big Beautiful Bill” was recently released by the House Ways and Means Committee. The draft legislation proposes that the country’s national debt ceiling be raised by $4 trillion. The legislation constitutes the focal point of the domestic economic agenda of President Donald Trump. In addition to raising the debt ceiling, the proposed legislation also aims to extend specific tax cuts that are set to expire at the end of this year after having been in place since Trump’s first term in office. New tax breaks on tips, auto loans, and overtime pay were also proposed in the draft legislation.
During his campaigning period, Trump promised that if elected he would eliminate taxes on Social Security benefits. The elimination of Social Security tax, however, has not been included in the draft legislation. Despite this, Republicans have included a tax break that could greatly benefit the millions of American seniors who are dependent on the monthly checks sent out by Social Security program.
In a recent post made to Truth Social, President Donald Trump “urged Republicans to unify behind House Ways and Means Committee Chair Jason Smith.”
Spanning almost four hundred pages, the proposed resolution contained several tax related proposals, with Trump’s tax breaks from his first term in 2017 also featuring. The proposal is to extend certain elements from the 2017 tax break that are slated to expire come year-end.
In a post made on social media platform X, House Speaker Mike Johnson wrote, “Our ‘One, Big, Beautiful Bill’ will deliver the America First Agenda. This has been a year in the making, and we will not rest until we get it done for the American people.”
How will seniors benefit from the ‘One, Big Beautiful Bill’?
Individuals aged above 65 could soon be qualify for a tax break if they are beneficiaries of Social Security, as outlined in the proposed resolution under the section titled “enhanced deductions for seniors.” According to the proposed bill, “for tax years 2025 through 2028, seniors will be entitled to an additional $4,000 deduction on Social Security wages.”
It should, however, also be noted that the bill does further elaborate that this tax deduction is subject to restrictions in relation to the beneficiary’s income. As such, all adjusted income exceeding $75,000 for individuals, and $150,000 for joint filers, will result in the deduction facing a four percent decrease.
According to Newsweek, director of the National Economic Council, Kevin Hassett has stated that, regarding the bill, Trump was “very, very pleased.”
“The bottom line is that the president’s top priorities are to take the previous tax cuts and extend them and make them permanent, but then to go after the things that are going to help middle-class folks,” Hassett shared with CNBC. “Let’s have no tax on tips, no tax on Social Security, no tax on overtime. Those are the top priorities for the president right now.”
Going forward from here, the hope from House Republican leadership is that the proposed bill can pass in the House and move forward to the Senate by Memorial day. House Ways and Means Committee Chair Jason Smith also shared with Fox News that he “hopes for Trump to sign the bill by Independence Day.”
In the House, however, the GOP is still facing some pushback since the party only holds the majority on a slim margin. Earlier in May, Chip Roy, a Texas Representative shared with reporters that there are “there 20 plus issues with the resolution in its current form.”