Some seniors are about to get a major Social Security tax break as a result of Donald Trump’s ‘big, beautiful bill.’
The bill offers a $6,000 tax deduction for individuals 64 and over who pay income tax on their Social Security benefit because they earn over a certain threshold.
However, the deduction starts phasing out for individuals who earn more than $75,000, or $150,000 for couples.
Those earning $175,000 or over – $250,000 for couples – are not entitled to the deduction at all.
‘This amounts to the largest tax break in American history for our nation’s seniors,’ the White House Council of Economic Advisers wrote in a recent report.
However, 64 percent of seniors do not earn enough to pay taxes on Social Security anyway, and therefore will not benefit from the break.
For those it does affect, the break will only last until 2028 when Trump leaves office.
The $6,000 measure falls short of Trump’s initial promises to remove all taxes on Social Security income.
Wealthy retirees will receive the ‘significant’ tax break until 2028
However, the White House argues it comes close with 88 percent of seniors now no longer subject to tax on the benefit.
‘The One Big Beautiful Bill delivers on President Trump’s promise of no tax on Social Security,’ a spokesperson for the White House said in a statement.
This is a ‘substantial tax break’ for upper-middle class Americans who pay taxes on retirement benefits, Marc Goldwein, from the Committee for a Responsible Federal Budget, told Axios.
However, for the millions of senior citizens who live in poverty and therefore are not taxed on their benefit it offers no relief at all, he added.
The added cost will also bring forward the expected date at which Social Security and Medicare are estimated to run out of funds.
The cost of the new tax deductions will see that date moved forward by a year, to 2032, according to analysis from the Committee for a Responsible Federal Budget.
Some have questioned whether seniors are the group most in need of a tax break given their assets have soared in value over their lifetimes.
‘As a whole seniors in this country are the wealthiest cohort in the history of the known universe,’ Goldwein said.
The $6,000 measure falls short of Trump’s promises to end all taxes on Social Security income
Social Security relies on its trust funds to provide monthly benefit checks to around 70 million
Concerns over the long-term future of Social Security are pushing retirees to begin banking their checks as early as possible, even though delaying their claims could lead to higher payments.
Every year you delay taking a Social Security payment after full retirement age you receive a significant increase in payments up to the age of 70.
Benefits taken for the first time at age 70 would be 76 percent higher than if they were claimed at 62, according to Boston University economist Laurence Kotlikoff.
Therefore, someone who put off claiming until they were 70 instead of 62 would end up with more dollars in their pocket if they live to at least 80.
