Certain retirees stand to benefit even more from President Donald Trump’s “One, Big, Beautiful Bill” as the Senate pushes for a $6,000 tax deduction for those aged 65 and older.
During his presidential campaign last year, Donald Trump made a promise to eliminate taxes on Social Security benefits. Whilst the elimination of Social Security taxes was not proposed in the Big Bill, Social Security beneficiaries still stand to benefit from the bill in the form of a substantial tax deduction. The initial proposal of a $4,000 tax deduction for seniors aged 65 and above was approved just last month. Now, however, it appears that a push for a $6,000 “bonus deduction” for those aged 65 ad older is being made.
“The bill provides a historic tax break to seniors receiving Social Security, fulfilling President Trump’s campaign promise to deliver much-needed tax relief to our seniors,” White House assistant press secretary Elizabeth Huston shared with CNBC.
Here is what you need to know.
Tax deduction boost for retirees
Last month, the U.S. House of Representatives approved the $4,000 tax deduction for middle and low income earning seniors. This tax deduction would only be applicable to seniors aged 65 and older with the threshold of eligibility standing at an income cap of $75,000 for individual people, and $150,000 for couples.
After being approved by the House of Representatives, the Senate is now proposing a $6,000 tax deduction for the same cohort of seniors. Whilst the figures may be different, both provisions are aimed at bringing some extra financial relief to retirees as costs of living continue to rise. Seniors do already have an existing extra standard deduction that is available to them, and this additional $4,000 tax deduction (or $6,000 if the Senate’s proposal passes) with exist as an add-on to the standard deduction. Furthermore, the additional tax deduction boost will only be available temporarily for a period of several years, starting in 2025 and ending in 2028.
“For the 2025 tax year (returns filed in early 2026), a single filer age 65 or older can claim an extra $2,000, while married couples filing jointly can add $1,600 for each spouse over 65,” as per a previous report from Kiplinger.
“For example, a married couple both over 65 would receive a total standard deduction of $33,200 ($30,000 base plus $3,200 extra for age),” according to guidelines from the IRS. If or when the Senate’s $6,000 deduction boost comes into play, it will be added to these figures.
For instance, “a single eligible taxpayer would be able to deduct a total of $23,000 ($15,000 standard + $2,000 age-based + $6,000 bonus), while a qualifying couple would potentially deduct over $45,200 if both are eligible.”
How beneficial will this “bonus” deduction be for seniors?
In the summary of the bill released by the Senate Finance Committee, this “bonus” tax deduction boost is laid out as a “bonus exemption to millions of low- and middle-income seniors, slashing their tax burden.” Aside from the $2,000 difference in figures, the proposal from the Senate, when compared to the proposal from the House, is quite similar with both tax deduction boosts being a temporary reprieve for retired individuals that will expire in 2028.
“Republicans are keeping President Trump’s promise to help seniors afford the cost of living through an expanded senior deduction,” said House Ways and Means Committee Chairman Jason Smith (R-Mo.) when speaking of the House’s $4,000 tax deduction.
If this “bonus” deduction does pass, there is still a possibility that some seniors will not be impacted at all by it. This is because the deduction boost, much like any tax deduction, is determined in relation to the income and tax situation of the filer, or in this case, retiree.
Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, explained to CNBC that “a median-income retiree earning up to $50,000 a year might see a tax cut of just under $500 annually under the House plan.”
In short, only those with sufficient taxable income would truly be able to reap the benefits of this additional $4,000 or $6,000 tax deduction.