Beneficiaries of the Social Security program have historically been required to pay taxes on up to 85% of their benefits if their combined income exceeded certain thresholds. During his 2024 presidential campaign, President Donald Trump frequently promised to eliminate taxes on Social Security benefits if elected.
Since taking office, Trump has been working on his extensive legislative package known as the One Big Beautiful Bill Act (OBBBA). This comprehensive piece of legislation was officially signed into law by the president last month, on July 4th. Among the various provisions included in this expansive bill is a new tax deduction specifically aimed at seniors aged 65 and older who earn below certain income thresholds.
Many official sources, including the White House and the Social Security Administration (SSA), have presented this new tax relief as effectively eliminating taxes on Social Security benefits for most seniors—despite the reality being somewhat more nuanced.
Here’s what you need to know about this new senior tax deduction and its real impact on Social Security taxes.
Taxes on Social Security benefits
Shortly after President Trump signed the OBBBA into law on July 4th, the Social Security Administration sent an email to all beneficiaries celebrating the passage of the legislation, asserting that it “eliminates federal income taxes on Social Security benefits for most beneficiaries.”
Almost immediately, experts criticized this email as misleading and an oversimplification of the new tax relief measures. Under the OBBBA, seniors aged 65 and older will qualify for an additional tax deduction—$6,000 for single filers and $12,000 for joint filers—which will be effective temporarily from 2025 through 2028.
This additional deduction means many seniors will either pay less or no taxes at all on their Social Security benefits, which led official communications to present the measure as an outright elimination of benefit taxation for the majority of seniors.
Marc Goldwein, Senior Vice President at the nonpartisan Committee for a Responsible Federal Budget, clarified: “The legislation does mean some seniors won’t pay taxes on their benefits, primarily because it raises their standard deduction, thus eliminating their tax liability.”
Howard Gleckman, Senior Fellow at the Urban-Brookings Tax Policy Center, expressed concern over the SSA’s communication, stating: “The email was quite misleading. It included multiple assertions that are either inaccurate, exaggerated, or phrased in a way that is likely to confuse beneficiaries.”
Who benefits from this new tax deduction?
According to Gleckman, this new senior deduction primarily benefits “middle- to upper-middle-class seniors,” with approximately half of all senior taxpayers expected to benefit, based on estimates from the Tax Policy Center.
The income eligibility thresholds for this deduction are $175,000 for single filers and $250,000 for joint filers. Consequently, higher-income households above these thresholds will not qualify for the new tax relief.
In the SSA’s email, Commissioner Frank Bisignano stated: “This legislation reaffirms President Trump’s commitment to protect Social Security and helps ensure seniors can better enjoy the retirement they’ve earned.”
However, this statement conflicts somewhat with the reality of how taxes on benefits contribute directly to funding Social Security and Medicare trust funds.
These trust funds are already in a precarious state, with a shortfall projected by 2034 according to the latest annual report from the Social Security Board of Trustees. Updated estimates from the Committee for a Responsible Federal Budget now indicate this shortfall could occur as early as late 2032. If Congress doesn’t take action before then, Social Security benefits could face an estimated cut of around 24%.