Much like any other income, once Social Security benefit income exceeds a certain threshold, it can be subject to taxation. As such, during his presidential campaign in 2024, one of the promises repeatedly made by the now elected President Donald Trump was the elimination of taxes on Social Security benefits. Subsequently, on July 4th, the One Big Beautiful Bill Act had officially been signed into law by the president and while it does not include the elimination of taxes on benefit income, the new legislation does allow for an additional $6,000 tax break for seniors aged 65 and older.
The unfortunate truth of the matter is that taxes on Social Security benefits cannot easily be eliminated without causing considerably significant repercussions to the finances of the Social Security program at large. Regardless of this however, many official channels have been framing the tax break under the One Big Beautiful Bill Act as the elimination of taxes on benefits for seniors, which has in turn sparked some criticism from former officials at the Social Security Administration (SSA).
Here is a breakdown of the new tax break under the One Big Beautiful Bill Act.
Tax relief under new legislation does NOT eliminate taxes on Social Security benefits
In a July 21st news release, the White House stated the following regarding the new mega bill, the One Big Beautiful Bill Act: “The largest tax cut in history for working- and middle-class Americans—including No Tax on Tips, No Tax on Overtime, and No Tax on Social Security—is now the law of the land, along with unprecedented tax relief for small businesses, farmers, workers, and families.”
Despite this statement, taxes on benefits have not been eliminated. Senior will, however, benefit from the One Big Beautiful Bill Act in the form of an additional $6,000 tax break for single filers and $12,000 for joint filers. In order to qualify for this tax relief, the filer must be at least 65 years of age and they must have a modified adjusted gross income of $75,000 for single filers, and $150,000 for joint filers.
Furthermore, this tax relief will only be in effect for a temporary period starting in 2025 and ending in 2028, unless Congress decides to extend it. Since low income seniors were already exempt from paying taxes, this new tax relief will mainly benefit middle to upper middle class earners. Prior to the OBBBA, income below $25,000 for single filers and $32,000 for joint filers was not taxed.
However, now that these thresholds have changed and a larger number of retirees (88% as per the White House) are exempt from paying taxes on their benefits, many official channels, including the White House and the SSA, have been claiming that the OBBBA eliminates taxes on benefits for most seniors.
Framing of tax relief sparks backlash
On July 4th, the SSA sent out an email to its beneficiaries mentioning that the under the OBBBA, beneficiaries “will no longer pay federal income taxes on their benefits, providing meaningful and immediate relief to seniors who have spent a lifetime contributing to our nation’s economy.”
As a result, many beneficiaries were confused as to whether taxes on benefits had truly been eliminated or not. Additionally, former SSA officials also spoke out, claiming that the email was misleading.
“People are like: ‘Is this real? Is this a scam?’ Because it’s not what they signed up for,” former senior adviser at the SSA, Kathleen Romig said to CNN at the time. “It doesn’t sound like normal government communications, official communications. It sounds like – you know – partisan.”
The Center on Budget and Policy Priorities also shared the following in a statement: “The Trump Administration has been peddling false and exaggerated claims about the harmful Republican megabill’s effects on the taxation of Social Security benefits, including in a blast email from the Social Security Administration. The new law doesn’t help most low- and middle-income seniors, and it depletes the Social Security trust funds faster. Moreover, the Administration’s misleading claims shouldn’t distract from how the law’s deep cuts to health care and food assistance will leave millions of seniors with low incomes worse off.”