Millions of seniors will keep more Social Security money under new law as confirmed by the government. This new law is part of the One Big Beautiful Bill Act (OBBBA) which was passed by Congress and backed by President Donald Trump. This bill is a major tax reform package aimed at giving financial relief to working and middles -class Americans.
While the law doesn’t completely remove taxes on Social Security, it raises the standard deduction for seniors meaning that many will owe the Social Security Administration (SSA) less or nothing on their benefits.
What the New Law Does for Social Security Taxes
Under the current law, up to 85% of a person’s Social Security benefits can be taxed if a person’s income is above $34,000. For married couples, the limit is $44,000. These income limits haven’t changed since the 1980s. Due to this, as inflation and incomes rise, more seniors have had to pay more taxes on their benefits.
The new law increases the standard deduction by up to $6,000 for seniors aged 65 and above from 2025 to 2028. The new law will therefore lower the amount of taxable income helping more seniors keep more of their Social Security money.
How Many Seniors Will See a Benefit?
In a post was made by White House on X (formerly Twitter), the bill provides the largest tax cut in history.
“The One Big Beautiful Bill delivers the largest tax cut in history for middle- and working-class Americans.”
This post also stated that 51.4 million seniors which is about 88% of all Social Security beneficiaries will not pay any tax on their benefits under this new law.
So, Are Social Security Taxes Going Away?
No, Social Security taxes are not going anywhere yet.
During the 2024 campaign, President Donald Trump promised to eliminate taxes on Social Security income, but there were legal limits that prevented that from happening until now.
The main issue is something called the Byrd Rule, which limits what can be included in a tax bill passed through a special process called budget reconciliation. This process allows the Senate to approve certain bills with a simple majority vote, like this one, which passed 51-50 with Vice President JD Vance casting the deciding vote.
Because of these rules, Congress doesn’t have the mandate to directly change how Social Security benefits are taxed through reconciliation. That explains why the bill works around it by raising the deduction instead.
What Experts Are Saying
Karla Dennis, a tax adviser and CEO of KDA Inc., told Newsweek:
“Getting rid of taxes on Social Security would make things a lot easier for retirees. Many seniors don’t expect to owe taxes in retirement, and this would help prevent surprise bills. In the end, we need real change that lasts, not just one-time payouts. Seniors deserve long-term relief they can count on.”
She also said the plan “sounds nice” but is a “short-term fix” that does not solve the bigger issue.
Who Gets the Most Help?
This tax break benefits mainly lower- and middle-income seniors. It phases out for individuals earning above $75,000 and married couples earning over $150,000. That means that richer retirees will probably not feel the impact of the new rule since they already pay taxes on most of their benefits.
What Should be Expected in the Future?
The expanded deduction will begin in the tax year 2025 and run until the end of 2028, unless it gets extended. Therefore, seniors will likely start feeling the effects when they file taxes in early 2026.
Conclusion
While the law does not completely eliminate taxes on Social Security, it offers relief for millions of seniors. By raising the standard deduction, more retirees will not owe anything in federal income tax on their benefits at least until 2028.
With many seniors depending on Social Security benefits to care for their daily expenses, even slight tax changes mean a lot financially.