The Social Security Administration (SSA) is facing backlash over an email and press release sent on the 3rd of July that many experts say misrepresented key facts about a new tax law. In the message, the SSA praised President Donald Trump’s so-called “One Big Beautiful Bill,” claiming it would bring major tax relief to seniors by removing federal income taxes on Social Security benefits for approximately 90% of recipients. But according to tax analysts, that’s not actually what the law does.
However, tax experts say this statement is misleading.
No Provision Eliminates Social Security Taxes
Despite what the SSA initially claimed, the new law doesn’t wipe out taxes on Social Security benefits for most Americans. What it actually does is offer a new tax break, referred to as the “senior bonus”, which could lower how much some seniors owe, but won’t eliminate taxes altogether. Tax expert Howard Gleckman from the Urban-Brookings Tax Policy Centre put it plainly: “It’s simply not correct to say that there’s a provision in this bill that is going to eliminate the Social Security benefit tax for 90% of the population.”
Gleckman also warned that the claim this legislation protects Social Security’s solvency is incorrect. In fact, by reducing tax revenue, it may put more pressure on the program’s already fragile funding.
Following criticism, the SSA issued a correction on July 8, clarifying that the bill provides an “enhanced deduction” for seniors, which could help some retirees keep more of their income. But it stopped short of addressing all concerns raised by experts.
How the $6,000 Senior Deduction Works
A key part of the new law is a tax break worth up to $6,000 for people 65 and older. It’s often referred to as a “bonus,” but it’s really just a deduction, not a check or refund. In simple terms, it reduces the amount of income that gets taxed, but it doesn’t put extra cash in anyone’s pocket.
The deduction kicks in starting in 2025 and will be available through 2028. Seniors can use it whether they take the standard deduction or itemize. But it’s not available to everyone, those earning up to $75,000 (or $150,000 for joint filers) can claim the full amount. If you make more than that, the deduction gradually gets smaller.
According to the White House’s Council of Economic Advisers, these combined tax changes could raise the share of seniors whose deductions exceed their taxable income from 64% to 88%.
Will This Reduce Social Security Taxes?
Whether your Social Security benefits are taxed depends on your “combined income”, that’s your adjusted gross income, plus any non-taxable interest, plus half of your Social Security benefits. If you’re single and your combined income is between $25,000 and $34,000, up to 50% of your benefits might be taxed. If it’s over $34,000, that jumps to 85%. For married couples, the 50% threshold kicks in between $32,000 and $44,000, and anything above $44,000 can be taxed up to 85%.
The new senior deduction, which is subtracted before calculating combined income, could help reduce the number of people who owe taxes on their benefits. However, it won’t eliminate taxes entirely for most recipients. Gleckman notes that the deduction will be most beneficial for middle-income seniors earning between $50,000 and $200,000.
Not Everyone Will Benefit
Seniors who already don’t pay taxes on their Social Security benefits won’t notice any difference from this new deduction. And those with higher incomes, above the cutoff, won’t qualify at all. It’s really just a break for people in the middle, where it can slightly lower how much of their income is taxed. According to the Tax Policy Centre, less than half of older Americans will actually benefit from it. And even then, most will just see a smaller tax bill, not a complete break from paying taxes.
Impact on Social Security’s Financial Health
While this deduction might give some seniors a bit of tax relief now, it could make Social Security’s financial problems worse down the road. The Committee for a Responsible Federal Budget estimates that the program could lose about $30 billion a year because of lower taxes on benefits. That could push the Social Security trust fund’s projected insolvency from early 2033 up to late 2032. Experts say it’s clear that something needs to be done soon to protect the program. The longer Congress waits, the harsher the future cuts or tax increases will have to be, and more people will feel the impact.