Last week, President Donald Trump’s mega bill titled the One Big Beautiful Bill Act narrowly passed in the Senate with a 51-50 voting ratio. Following this, the bill has now been passed by Congress after a 218-214 vote in the House last Thursday.
The Social Security Administration (SSA) has shared in the celebration of the passing of the One Big Beautiful Bill Act, claiming that it is a “landmark” legislation. Now that the bill the SSA is calling a landmark legislation has been passed by Congress, it will be signed into law by President Trump at the White House on this upcoming Friday, July 11th.
Here is what you need to know.
No taxes on Social Security benefits under the One Big Beautiful Bill Act?
During his presidential campaign in 2024, Donald trump made repeated promises to eliminate taxes on Social Security benefits. Eliminating taxes on benefits, however, would cause major repercussions to the Social Security program at large because the elimination of taxes on benefits would result in the elimination of a source of revenue for the program.
Despite taxes not being eliminated on benefits, senior citizens on Social Security will still be able to save an additional bit of their retirement income under the One Big Beautiful Bill Act. The SSA has stated that this new bill is a “long-awaited tax relief to millions of older Americans.” As such, under the new bill, senior citizens will now have “a new bonus deduction of $6,000 for seniors age 65 and older ($12,000 for married seniors) beginning in 2025,” as per the White House.
In a news release, Frank Bisignano, Commissioner of Social Security said, “This is a historic step forward for America’s seniors. For nearly 90 years, Social Security has been a cornerstone of economic security for older Americans. By significantly reducing the tax burden on benefits, this legislation reaffirms President Trump’s promise to protect Social Security and helps ensure that seniors can better enjoy the retirement they’ve earned.”
So whilst taxes on Social Security benefits have not been eliminated entirely, under the One Big Beautiful Bill Act, qualifying seniors will be able to benefit from the targeted tax deduction that will be available for the temporary period starting in the tax year 2026, all the way through to 2028 — unless lawmakers decide to motion to extend the dates for this tax deduction.
Following the passage of the bill last Thursday, President Trump said in Iowa, “I think when you go over the bill, it was very easy to get them to a ‘yes.’ … Biggest tax cut in history.”
In a statement to Newsweek, Karla Dennis, an enrolled tax agent and CEO of the tax strategy firm KDA Inc., said, “I really believe we need lasting change for seniors, not just quick fixes or one-time payments that grab attention but don’t solve anything long term. We should stop taxing Social Security for people who are living on moderate incomes. Seniors making under $100,000 a year should not be taxed. The way Social Security is taxed today doesn’t match how people earn income in retirement today.”
Criticism for the One Big Beautiful Bill Act
Whilst the additional tax deduction will act as a reprieve for seniors on a fixed income, other policies in the legislation did spark some criticism. For instance, under the bill, Medicare, along with several other low-income programs will be hit with substantial cuts. As such, the Democrats have stated that these cuts “threaten essential safety nets that millions rely on for basic health and nutrition.” Furthermore, according to the Congressional Budget Office, “the overall fiscal impact of the bill is projected to result in $3.3 trillion in additional deficit spending over the next decade.”