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Taxes on Social Security benefits were not eliminated despite what you've heard
All the misleading buzz about Social Security and tax cuts for seniors in "One Big Beautiful Bill" foreshadows one ugly scene after another at tax preparation offices next year. It's not going to be pretty when many ill-informed retirees file 2025 tax returns. "What do you mean I'm paying taxes on my Social Security benefits?" some will no doubt ask. Already in July, I've spotted social media posts by tax professionals who dread the day when they will have to say "welcome to reality" to clients. "'Yes, your Social Security is still 85% taxable. Yes, I know that's what Trump's still saying. But pay attention to what he signed, not what he says,' he yelled for the 792,682,314th time into the void," posted Adam Markowitz, an enrolled agent in Florida, on X. What's sparking confusion for retirees about taxes The White House proclaimed, once again, "NO tax on Social Security" on July 4 when President Donald Trump signed what he calls "The One Big Beautiful Bill" into law. It's not an accurate statement. He also sent a mass email on July 12 making the same point. The Social Security Administration sent a gushy, questionable email July 4 to millions of people collecting Social Security benefits and others. Soon afterward, I heard from some retirees who couldn't believe how a federal agency was doing a hard sell about the supposed benefits and creating even more confusion. "The bill ensures that nearly 90% of Social Security 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," Social Security stated in its email and online. Ninety percent, really? More on that one later. At one point, the email seemed to suggest that retirees were getting two tax breaks. "The new law includes a provision that eliminates federal income taxes on Social Security benefits for most beneficiaries, providing relief to individuals and couples. Additionally, it provides an enhanced deduction for taxpayers aged 65 and older, ensuring that retirees can keep more of what they have earned," according to a copy of the email forwarded to me. Additionally? There is no "additionally." The tax cut is an enhanced deduction for taxpayers aged 65 and older. That's it. The law doesn't eliminate the risk that some will pay taxes on their Social Security benefits. Trump taxes in 2025: Gamblers will pay more taxes in 2026 and beyond when Trump's 'Big, Beautiful Bill' hits The Social Security blog online now refers to a correction without saying what was wrong. "Correction Notice: This blog was updated on July 7, 2025. The second sentence of the fourth paragraph originally read, 'Additionally, it provides an enhanced deduction for taxpayers aged 65 and older, ensuring that retirees can keep more of what they have earned.'' The word "additionally" is no longer in the copy. Instead, the paragraph in the online blog at now reads: "The new law includes a provision that eliminates federal income taxes on Social Security benefits for most beneficiaries, providing relief to individuals and couples. It does so by providing an enhanced deduction for taxpayers aged 65 and older, ensuring that retirees can keep more of what they earned." Clear as mud, as one of my relatives might say. How does the 'senior bonus' work? A new, temporary "senior bonus" deduction of up to $6,000 will apply to taxpayers who are 65 and older in 2025, 2026, 2027 and 2028. It ends after that without congressional action. Tax professionals call this a "special personal exemption" that aims to reduce the tax bill for many seniors. In general, seniors with high incomes would not qualify; lower income seniors who do not pay taxes would not benefit, either. "As a deduction and not a refundable credit, it will not help seniors who already owe no income taxes," said Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting in Riverwoods, Illinois. Luscombe explained that higher income seniors receive a smaller tax break or no tax break because the deduction starts phasing out for those with a modified adjusted gross income of $75,000 for singles and $150,000 for joint filers. And, yes, there are plenty of other rules but, oddly enough, you do not have to be receiving Social Security benefits each month to qualify. It will not pay to be young — no matter what your income. Taxpayers who are 62, 63 and 64 at the end of a tax year do not qualify for the "senior bonus" deduction. They could still pay income taxes on Social Security benefits, if they're collecting benefits and hit certain income thresholds, without any offsetting bonus deduction. Here's a breakdown of some more rules that you'll need to know when filing a 2025 return: Some married couples can get a better deal: If both spouses are 65 or older, each could receive up to $6,000 or up to $12,000 total for the senior bonus deduction in a given tax year. Married couples face another rule: Married couples must file jointly to claim the senior deduction. If you opt for "married filing separately," you will not qualify for the senior bonus deduction, according to Tom O'Saben, enrolled agent and director of tax content and government relations for the National Association of Tax Professionals. Social Security number required: To claim the deduction, the senior must have a valid Social Security number. Those with higher incomes face limits: The tax break would phase out entirely for single taxpayers 65 and older with a modified adjusted gross income at $175,000. It would phase out entirely for married taxpayers 65 and older with a modified adjusted gross income at $250,000. 6% is the phase out number. When your income climbs above the threshold, the deduction phases out at a rate of 6%. The National Association of Tax Professionals, which has 23,000 members, offered an example for a 70-year-old retiree who is single and has a modified adjusted gross income (MAGI) of $90,000. In this example, $15,000 of MAGI exceeds the $75,000 threshold for a single tax filer. Take out your calculator and multiple $15,000 by 6% to hit $900. The maximum $6,000 senior bonus deduction is then reduced by $900 in this example to reach a senior deduction of $5,100. Tax relief for parents: How the Child and Dependent Care Credit can cut summer camp costs in 2025 Taxes on Social Security were never eliminated Believe me, you're not doing your friends any favors now by insisting that there are no taxes on Social Security benefits. Some people still need to withhold taxes on their Social Security benefits, if they have other significant sources of income. At no point did the House bill or Senate version, which was later passed by the House and signed into law by Trump, ever include a provision to eliminate the tax on Social Security or provide a deduction for Social Security income, according to a summary of the massive reconciliation bill provided by Wolters Kluwer, an information services company. Trump famously proposed making Social Security income tax-free during his 2024 campaign. But such a change could not be part of the budget reconciliation process. One provision of the Congressional Budget Act of 1974 prohibits Senate reconciliation bills from including any measure that changes Social Security benefits or taxes. "It's fair to frame this new deduction as an attempt to fulfill the spirit of the president's campaign proposal consistent with the limits imposed in the reconciliation process," said Garrett Watson, director of policy analysis at the nonpartisan Tax Foundation. "But selling this politically as exempting Social Security from income tax is not accurate and will confuse or upset the seniors who end up paying tax on some benefits," Watson said. The senior bonus deduction, Watson points out, applies to any source of taxable income that a taxpayer who is 65 or older has and may not necessarily eliminate all tax on Social Security benefits. Social Security benefits began being taxed at the federal level in 1984 to shore up the Social Security trust fund, which was facing insolvency. At best, the new tax break means many seniors will save some money on taxes over four years. "Despite the SSA claims, most would see their income taxes on Social Security benefits reduced, not eliminated," wrote Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center. In an online report July 9, Gleckman wrote that the biggest beneficiaries are seniors making between about $80,000 and $130,000. The senior bonus deduction would for that group would amount to an average tax cut of about $1,100 or roughly 1% of their after-tax income, he said. The tax deduction of up to $6,000 would benefit fewer than half of older adults, according to the Tax Policy Center estimates. How much a senior who qualifies for the "senior bonus" will save on taxes will depend on their taxable income, which determines your marginal tax rate. At a 12% marginal tax rate, for example, the $6,000 deduction for a single taxpayer who is 65 or older would result in $720 in tax savings, according to Watson. For a single taxpayer, the 12% tax rate applied on taxable income from $11,926 through $48,475 in 2025. Annual inflation adjustments can be made to marginal tax brackets. Hype, complexities and more can get your head spinning All this begs the question: How can Trump say there will be no taxes on Social Security benefits? Well, retirees will need to treat this one as one of those Trumpisms where, maybe, you need to study the fine print first. "The president often seems to try to put as positive a spin as possible on an issue without being totally consistent with the facts," Luscombe said. The 90% number used in the email sent by the Social Security Administration appears to track a 90% figure used by the White House. It is misleading. Many people did not have to pay taxes on Social Security benefits based on their income before the mega tax bill was signed into law July 4. About 40% of people who get Social Security currently pay income taxes on their benefits, according to an earlier report issued by the Social Security Administration in 2025. Other estimates, though, suggest that a bit more than 50% currently pay taxes. The Tax Foundation did not estimate the portion of seniors who would not pay tax on benefits under the new deduction. But noted that roughly half of all Social Security beneficiaries did not pay federal income tax on their Social Security benefits before the new tax law. Gleckman, at the Tax Policy Center, told the Detroit Free Press — part of the USA TODAY Network — that the 90% figure being used by the Social Security Administration isn't close to reality. In his online blog, Gleckman said the administration apparently came up with its 90% estimate by "assuming all tax deductions, including the new senior deduction, are used only to reduce Social Security benefit taxes." "But, of course, older adults pay taxes on all their taxable income, including from sources other than Social Security," Gleckman wrote. The Tax Policy Center's estimate is that about half of all recipients will pay at least some income taxes on their Social Security benefits, Gleckman wrote. "That is, they face higher tax liability than they would if benefits were not taxable. "The Social Security system is complicated, and, in many ways, its complexity is terrifying for older adults, many of whom rely on its benefits to pay living expenses in old age. The latest SSA communication does not help and indeed may make matters worse," Gleckman wrote. How Social Security benefits are taxed will remain a complex headache for many people aged 62 and up. Based on Social Security data, nearly 23% of men and 24.5% of women who claimed retirement benefits in 2022 were age 62. The earliest age that you can claim Social Security retirement benefits is 62. By collecting as early as possible, though, you'd receive a reduced monthly retirement benefit that is cut by a small percentage for each month before your full retirement age. The full retirement age is 67 now for those born in 1960 and after. For those born earlier, the full retirement age varies and is less than 67 based on when you were born. How Social Security benefits are taxed Unfortunately, it doesn't take much extra income to get hit with some taxes because income thresholds that trigger the tax on Social Security benefits do not adjust for inflation. For single filers, the threshold for paying taxes on up to 50% of Social Security benefits applies when your combined income is between $25,000 and $34,000 a year. Once the combined income is higher, up to 85% of benefits may be taxable. Couples filing a joint return face taxes on up to 50% of their Social Security benefits if their combined income is between $32,000 and $44,000. If the couple's combined income is higher than that, up to 85% of benefits would be taxable. Combined income is your adjusted gross income, plus nontaxable interest, such as interest on certain bonds, plus half of your Social Security benefits received that year. As a result, someone who is working while collecting Social Security benefits would need to take their earnings from a job into account. The same's true for someone who is retired and taking taxable withdrawals from traditional 401(k) plans. All that tax complexity isn't going to vanish. O'Saben, of the National Association of Tax Professionals, said he's frustrated by how the senior bonus deduction is being marketed. He heard a news story on the radio that implied that Social Security benefits were no longer taxable and he found himself yelling at the radio while driving. "There is no provision making Social Security benefits tax free," O'Saben said. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor. This article originally appeared on Detroit Free Press: Trump didn't kill taxes on Social Security, despite what you've heard Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Cook County Board President Toni Preckwinkle endorses state Sen. Robert Peters for Congress
Cook County Democrats last week declined to pick official favorites in the crowded primary fields ahead of next year's congressional primaries, but the party's chair is backing a protégé in the race to replace U.S. Rep Robin Kelly in the district that stretches from the South Side to central Illinois. Cook County Board President Toni Preckwinkle on Monday announced her support for state Sen. Robert Peters, a South Side progressive, in the March Democratic primary to replace Kelly, who is forgoing a reelection bid for the 2nd Congressional District seat to run for the U.S. Senate. Peters worked as an activist on economic and criminal justice issues with both Preckwinkle and another of her protégés, former Cook County State's Attorney Kim Foxx. Preckwinkle also backed Peters for an appointment to the Illinois Senate in 2019 to replace Kwame Raoul after Raoul's was elected the state's attorney general. Preckwinkle's endorsement comes as the potential entry of former U.S. Rep. Jesse Jackson Jr. into the race could dramatically alter the landscape in the 2nd Congressional District primary. Preckwinkle described Peters in a statement Monday as one of her 'most trusted partners in the state legislature.' 'There is no stronger advocate for working people, for social justice and for economic fairness than Robert,' Preckwinkle said. 'I've watched him grow from a hard working young organizer, to an accomplished state legislator. All the while, he's never shied away from the tough conversations necessary to build the coalitions needed to win difficult fights.' Peters acknowledged the four-term County Board president as 'a mentor for me throughout my time in organizing and in public service.' 'I know she will continue to be a trusted ally and coach as I campaign all throughout the 2nd District, and as I take on the big fights in Congress, like fighting cuts to Medicaid, (Supplemental Nutrition Assistance Program) benefits and the (Department of Veterans Affairs),' Peters said in a statement. Peters, who already has a big-name endorsement from U.S. Sen. Bernie Sanders of Vermont, has an early fundraising advantage over six other Democrats who've officially declared their candidacies, a group that doesn't include Jackson. From entering the race in mid-May through the end of June, Peters raised more than $415,000, and he entered July with nearly $375,000 in his campaign account, Federal Election Commission records show. That's more than all the other candidates combined, though two of them, Cook County Commissioner Donna Miller of Lynwood and state Sen. Willie Preston of Chicago, entered the race after the end of the previous reporting period. After forming an exploratory committee, Jackson told the Tribune last week that it's his 'intention to secure a place on the ballot' in the primary for his former seat in Congress. Jackson resigned in 2012 amid a corruption probe and later went to federal prison for conspiring to defraud his reelection campaign of about $750,000 that was used to pay for personal expenses such as home renovations, two mounted elk heads and high-end merchandise, including mink clothes and a Michael Jackson autographed guitar. Jackson's family has rallied behind Preckwinkle in the past. When she was overwhelmingly defeated in her 2019 bid for mayor, Jackson's father, civil rights icon the Rev. Jesse Jackson, hosted her and Mayor-elect Lori Lightfoot at his Rainbow/PUSH Coalition and told those in attendance not to abandon Preckwinkle in her moment of defeat. He enjoined the crowd to repeat after him: 'Toni is the president of the Cook County Board and of all Democrats. We shall fight to maintain her gain.' The 2nd Congressional District stretches south along the Lake Michigan shoreline and the Indiana border from 43rd Street in Chicago to Danville. Major party candidates for the March 17 primaries can begin collecting petition signatures on Aug. 5 to get their names on the ballot. Solve the daily Crossword
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5 years after Ohio's $60M bribery scandal, critics say more could be done to prevent a repeat
COLUMBUS, Ohio (AP) — Five years after a $60 million bribery scheme funded by FirstEnergy Corp. came to light in Ohio, expert observers say the resulting prosecutions, lawsuits, penalties and legislation haven't led to enough change and accountability to prevent politicians and corporate executives from cutting similar deals in the future. The scheme — whose prospective $2 billion-plus pricetag to consumers makes it the largest infrastructure scandal in U.S. history — surfaced with the stunning arrests of a powerful Republican state lawmaker and four associates on July 21, 2020. That lawmaker, former House Speaker Larry Householder, is serving 20 years in federal prison for masterminding the racketeering operation at the center of the scandal. Jurors agreed with prosecutors that money that changed hands wasn't everyday political giving, but an elaborate secret scheme orchestrated by Householder to elect political allies, become the House speaker, pass a $1 billion nuclear bailout law in House Bill 6 and crush a repeal effort. One of the dark money groups Householder used also pleaded guilty to racketeering. Householder and a former lobbyist have unsuccessfully challenged their convictions. Two of the arrested associates pleaded guilty, and the other died by suicide. Dark money keeps flowing Any hope that the convictions would have clarified federal law around 501(c)4 nonprofit 'dark money' groups or prompted new restrictions on those hasn't materialized, said former U.S. Attorney David DeVillers, who led the initial investigation. 'I think it's actually worse than it was before,' he said. 'Nationally, you have both Democrats and Republicans using these, so there's no political will to do anything about it.' Indeed, a study released in May by the Brennan Center for Justice found that dark money unleashed by the 2010 Citizens United decision hit a record high of $1.9 billion in 2024 federal races, nearly double the $1 billion spent in 2020. The vast majority of money from undisclosed donors raised into dark money accounts now goes to super PACs, providing them a way to skirt a requirement that they make their donors public, the study found. DeVillers said one positive result of the scandal is that Ohio lawmakers appear genuinely concerned about avoiding quid pro quos, real or perceived, between them and their political contributors. Anti-corruption legislation perennially introduced by Ohio Democrats since the scandal broke has gone nowhere in the GOP-dominated Legislature. Republican legislative leaders have said it is outside their authority to amend federal campaign finance law. The U.S. Attorney's office declined to discuss the investigation because prosecutions remain ongoing. Two fired FirstEnergy executives have pleaded not guilty on related state and federal charges and await trial. Former Public Utilities Commission of Ohio Chairman Samuel Randazzo, to whom FirstEnergy admitted giving a $4.3 million bribe in exchange for regulatory favors, had faced both federal and state charges. He died by suicide after pleading not guilty. State regulator hasn't penalized FirstEnergy Akron-based FirstEnergy — a $23 billion Fortune 500 company with 6 million customers in five states — admitted using dark money groups to bankroll Householder's ascendance in exchange for passage of the bailout bill. It agreed to pay $230 million and meet other conditions to avoid prosecution, and faced other sanctions, including a $100 million civil penalty by the U.S. Securities and Exchange Commission. But FirstEnergy hasn't yet faced consequences from the state regulator. 'They never actually got penalized by regulators at the PUCO level,' said Ohio Consumers' Counsel Maureen Willis, the lawyer for Ohio utility customers. Testimony in four PUCO proceedings stemming from the scandal finally began last month after the cases were delayed for nearly two years, in part at the request of the Justice Department. They're intended to determine whether FirstEnergy used money for bribes that was meant for grid modernization and whether it improperly comingled money from its different corporate entities. FirstEnergy spokeperson Jennifer Young said it invested $4 billion in grid upgrades in 2024 and plans to spend a total of $28 billion through 2029. Young said FirstEnergy has redesigned its organizational structure, established a dedicated ethics and compliance office, overhauled the company's political activity and lobbying practices and strengthened other corporate governance and oversight practices. 'FirstEnergy is a far different company today than it was five years ago,' she said. The PUCO also made changes in response to the scandal. Chair Jenifer French told state lawmakers that ethics training has been enhanced, staff lawyers and the administrative law judges who hear cases now report to different directors to ensure legal independence, and she never takes a meeting alone. Some tainted money hasn't been returned to customers Ashley Brown, a retired executive director of the Harvard Electricity Policy Group who previously served as a PUCO commissioner, said the commission is the only state entity with the power to order FirstEnergy to return tainted cash — including the bribe money — to customers. That largely hasn't happened. He said the Ohio commission had vast power to hold FirstEnergy accountable for its misdeeds but hasn't conducted its own management audit of the energy giant, demanded an overhaul of FirstEnergy's corporate board or pressed for public release of FirstEnergy's own internal investigation of the scandal, whose findings remain a mystery. Shareholders won some accountability measures as part of a $180 million settlement in 2022, but they continue to fight in court for release of the investigation. Willis does, too. 'How do you allow a utility to operate a vast criminal conspiracy within the utility (with) consumer dollars, and you don't even look at what went wrong?' Brown said. PUCO spokesperson Matt Schilling reiterated that the commission's probes are ongoing. He said the panel has vowed to take its proceedings 'wherever the facts lead.' The portion of HB 6 that bailed out two FirstEnergy-affiliated nuclear plants was repealed in 2021, and $26 million was refunded to customers. The scandal investigation revealed that other power distribution companies got a lucrative payout of their own added to the bill in exchange for their buy-in: subsidies for two unprofitable Cold War-era coal plants. It wasn't until April that a law was passed repealing those subsidies. Until that takes effect Aug. 14, the charges cost Ohio ratepayers $445,679 a day — and it's unclear if or when they'll get that money back. A ticker on Willis' website puts the total they've paid at more than $500 million and counting. Julie Carr Smyth, The Associated Press Sign in to access your portfolio
