When Donald Trump rolled out his big tax plan, he promised seniors a major win, no more taxes on Social Security benefits. But now that the bill has passed, it turns out things didn’t quite pan out that way.
No End to Taxes on Social Security Benefits
Despite all the campaign talk, the final GOP tax and spending package didn’t get rid of taxes on Social Security benefits. Republicans had to leave that part out because of Senate budget rules. They used a process called budget reconciliation to pass the bill without Democratic support, but that process comes with limits on what changes can be made.
But that hasn’t stopped President Trump and some officials from saying the bill did eliminate taxes on Social Security benefits. In fact, some public statements made it sound like seniors wouldn’t have to pay taxes on their benefits anymore, which has caused a lot of confusion.
What Seniors Are Actually Getting
Rather than scrapping taxes on Social Security, the bill offers seniors a different kind of break, a bigger tax deduction. Starting in 2025 and running through 2028, anyone over 65 can claim an extra $6,000 off their taxable income. Married couples filing jointly can double that to $12,000.
But there’s a catch:
- The deduction starts to shrink once a single filer earns more than $75,000, or $150,000 for couples.
- And if your income is above $175,000 (or $250,000 for joint filers), you don’t qualify at all.
Who Gains the Most?
The bigger deduction will help some older Americans, but not most. According to the nonpartisan Urban-Brookings Tax Policy Centre, fewer than half of seniors will actually see any benefit. Those who do? Mostly people earning between $80,000 and $130,000 a year.
For that group, the average tax cut will be around $1,100, or about 1% of their income after taxes. Had Congress gone ahead and eliminated taxes on Social Security entirely, those same folks would have saved closer to $1,300.
“It’s certainly a noticeable benefit,” said Tom O’Saben, of the National Association of Tax Professionals. “It will represent a savings, but not to the degree that senior citizens may have been expecting had they been able to exclude all their Social Security benefits from taxation.”
Some Left Out Entirely
The new deduction leaves a lot of seniors out. Those with very high incomes don’t qualify because they earn too much. And many low-income seniors won’t benefit either, they typically don’t pay federal income tax anyway, thanks to the existing standard deduction, which was $33,200 for married couples before this change.
The Trump administration says around two-thirds of people getting Social Security already don’t pay taxes on their benefits. If the original campaign promise, to scrap taxes on Social Security entirely, had gone through, wealthier seniors would have saved a lot more.
In a twist, some people over 65 who aren’t even collecting Social Security yet will qualify for the new deduction. But younger recipients, those under 65, won’t see any gain from it at all.
Still Paying Taxes on Benefits
Even with the new deduction in place, most people on Social Security will still owe taxes on their benefits. The Tax Policy Centre says about 29 million households will continue paying, only a slight drop from 31.2 million before the change.
And there’s a bigger issue down the line. While the law didn’t scrap taxes on benefits altogether, it does lower how much income gets taxed. That means less money flowing into key programs like Social Security and Medicare. The Committee for a Responsible Federal Budget warns that this could push those programs closer to financial trouble, potentially speeding up the trust funds’ depletion by a year, from 2033 to 2032.
Public Confusion and Misinformation
Tax experts say there’s still a lot of confusion among seniors about what the new law actually changes. Some believe it wipes out taxes on their Social Security benefits entirely, but that’s not the case. Most will still owe at least some tax, and for many, the impact will be minimal.
Larry Gray, a CPA in Missouri, said several older clients were surprised to learn the taxes were still in place. They believed their Social Security was going to be tax-free. Part of the problem, he added, is misleading messaging from both Capitol Hill and the administration.
Even the Social Security Administration added to the confusion, sending out emails that implied the bill significantly cut taxes on benefits. The White House took it a step further, posting an article titled “No Tax on Social Security is a Reality in the One Big Beautiful Bill.” That messaging has led many to believe their benefits are now fully tax-free, when in reality, most will still see little to no change.