During the 2024 presidential campaign, the now elected president Donald Trump repeatedly made promises to bring an end to the taxation of Social Security benefits. The unfortunate truth of the matter is that eliminating taxes on Social Security is far easier said than done as it would require Congressional approval — not to mention is would cause the already struggling Social Security program to lose a source of revenue.
That being said, upon the passage of the One Big Beautiful Bill Act, official channels such as the White House and the Social Security Administration (SSA) began celebrating passage of the legislation saying that it eliminates taxes on Social Security benefits for almost all seniors. While this is technically true, taxes on Social Security benefits have not been eliminated as such. Rather, the threshold of income that is taxable has changed resulting in a higher percentage of seniors becoming exempt from paying tax on their benefit income.
Does the One Big Beautiful Bill Act eliminate taxes on Social Security benefits?
The short answer is no, taxes on Social Security benefit income has not been eliminated under the newly passed legislation. The One Big Beautiful Bill Act does, however, include an additional tax deduction for seniors that will be in effect for a temporary period ending in 2028.
As things currently stand, if you as a single filer have a provisional income higher than $25,000, up to 50% of your benefits will be subject to taxation. If you are a married joint filer, the threshold before your income becomes subject to taxation is $32,000. Additionally, if a single filer’s income exceeds $34,000 ($44,000 for married joint filers), up to 80% of their benefits will be taxed.
These limits have remained in place following the passage of the One Big Beautiful Bill as well, however, seniors aged 65 and older will now qualify for an additional tax deduction under the new bill. If a senior single filer has an income that does not exceed $75,000, they will qualify for an additional $6,000 tax break. For married joint filers, the income threshold is $150,000 and if their income does not exceed this, they will qualify for an additional $12,000 tax break.
If the filer’s income exceeds these thresholds, the tax deduction will begin to phase out. As a result of these additional deductions for seniors, it has been determined by House Ways and Means Committee Chairman Jason Smith that around 90% of seniors will now be exempt from taxation. It is also worth noting that this temporary deduction is not exclusively available to Social Security recipients, but rather all seniors who are aged 65 and older who meet the required income thresholds will be able to qualify for the tax break.
Michigan eliminates tax on Social Security, tips, and overtime
Social Security tax laws can often vary from one state to the next. Recently Michigan Governor Gretchen Whitmer signed a bill that would eliminate taxes on all Social Security, tip, and overtime income. On October 7th, Governor Whitmer signed into law a batch of bills tied to the state budget, and included in the newly approved legislation is the elimination of all state level taxes for Social Security income, as well as tip and overtime income.
“The tax changes will save hundreds of thousands of seniors and working families money on their taxes every year,” Whitmer’s office stated.
“This balanced budget delivers on the kitchen table issues that make a real difference in people’s lives. Our budget fixes the damn roads, cuts taxes for seniors and working families, funds first responders, secures core health care services that millions of Michiganders rely on, protects our air, lakes, and land, and increases government efficiency to saves taxpayers time and money,” Governor Whitmer stated in an October 7th press release.