No Tax on Social Security for Seniors? Trump Tax Policies Explained

Newsweek

4 hours ago

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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President Donald Trump pledged to end taxes on Social Security as part of the GOP's 'One Big Beautiful Bill' signed into law on July 4.
The exact wording of the law actually stipulates a $6,000 tax deduction for individuals aged 65 and older, likely raising the number of seniors who won't pay taxes on Social Security to 88 percent. Currently, 64 percent of seniors already don't pay taxes on Social Security benefits.
Why It Matters
Seniors who rely on Social Security are at an increased risk of poverty. While more than 70 million Americans receive benefits each month, about one in three adults aged 65 and older are living below the poverty level, according to ConsumerAffairs.
If taxes no longer apply to Social Security earnings, seniors will have more income to cover basic living expenses such as housing, transportation and health care.
U.S. President Donald Trump speaks during an event at the Kennedy Center on August 13, 2025 in Washington, D.C.
U.S. President Donald Trump speaks during an event at the Kennedy Center on August 13, 2025 in Washington, D.C.What To Know
What is the One Big Beautiful Bill?
Trump's massive tax and spending package was nicknamed the "One Big Beautiful Bill" and makes changes across a wide range of policy areas.
While the law extends Trump's 2017 tax cuts, it also eliminates taxes on tips and overtime, and increases funding for immigration enforcement and defense.
However, to accomplish that, the bill also cut nearly $1 trillion from Medicaid and lowered food assistance.
When was the bill passed?
Trump signed OBBBA on July 4, just a day after the House of Representatives narrowly approved the legislation 218—214.
Since then, critics have sounded the alarm on the law's newly imposed 80-hour-per-month work requirements on many adults receiving Medicaid and the expansion of SNAP work rules to more beneficiaries.
The law also gets rid of many clean energy tax credits that were available under President Joe Biden.
How does the bill impact senior citizens?
As it concerns seniors, one of the most pressing issues is whether or not the bill actually translates into no taxes on Social Security.
The law's $6,000 tax deduction for Americans aged 65 and older means couples filing jointly can reduce taxable income by up to $12,000, with the benefit available from 2025 to 2028.
Since the threshold for income is $25,000 for individuals and $32,000 for couples before benefits get taxed, OBBBA effectively will raise the percentage of seniors who don't pay taxes on Social Security to 88 percent, according to the White House.
Because low-income retirees have already been tax-exempt, however, the law provides tax relief to middle and upper-middle class seniors.
To get the full $6,000 deduction, single filers must have a modified adjusted gross income under $75,000, while married couples must be below $150,000.
"This new deduction is not an "above-the-line" deduction, so it does not lower your AGI nor MAGI, and therefore does nothing to reduce the taxable amount of your Social Security benefits. But it still lowers your total taxable income," Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek.
"In practice, seniors will calculate AGI and MAGI just as they always have, and a corresponding percentage, 0 percent to 85 percent, of their Social Security benefits will be added to their taxable income. Then they will subtract standard or itemized deductions, just as they always have, but now will receive an additional $6,000 deduction per taxpayer."
When will the changes begin?
The deduction starts for the tax year 2025, so seniors will be able to claim it when they file next year.
As of today, the deduction is only available until 2028, at which point it would need to be reauthorized by Congress.
"The provisions are retroactive and already in effect for 2025," Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. "Now is the time to work with a financial adviser who understands these rules and can run simulations on how it affects your plan."
What People Are Saying
The Center on Budget and Policy Priorities said 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."
The White House said in news release on July 21: "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."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "The deduction is set to expire in 2028. Whether it stays or goes will depend on the political climate. Expect this to be used as a political talking point in upcoming elections, with both sides dangling senior tax savings as a way to win votes."
What Happens Next
Seniors will start benefiting from the tax deduction in 2026, but experts are warning that it could further escalate Social Security's funding problems, as the agency is set to run out of money for full benefits by 2033.
"While this certainly could benefit some seniors, it could further escalate problems with solvency," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.
"With Social Security's funding scheduled to encounter a shortfall in the next few years, worries over further additions for existing beneficiaries and future ones, while certainly good for those individuals, could further complicate the long-term viability of the program. Legislators will have to examine how these tax benefits can be balanced down the line to accommodate present and future enrollees."