Understanding How Trump’s One Big Beautiful Bill Affects Social Security Benefits
President Trump’s “Big Beautiful Bill” has been making headlines, particularly for what it could mean for older Americans collecting Social Security. While many headlines have suggested that the bill would eliminate taxes on Social Security benefits, that’s not entirely accurate. Instead, the legislation includes a targeted tax deduction for seniors that could lower or eliminate federal taxes on their benefits, depending on their income. Here’s what to know about this $6,000 “senior bonus.”
What Is the $6,000 Senior Bonus?
This so-called senior bonus is technically a $6,000 additional standard deduction available to taxpayers who are 65 years and older. Rather than eliminating taxes on Social Security benefits across the board, the bill increases the standard deduction for older Americans, which could result in significantly lower taxable income, especially for middle-income seniors.
For a married couple where both spouses are 65 or older, the deduction could be doubled, potentially reducing taxable income by up to $12,000.
How the Deduction Affects Social Security Taxes
A portion of Social Security benefits becomes taxable if an individual’s combined income exceeds $25,000, or $32,000 for couples. This could potentially result in federal taxation of up to 85% of their benefits. The $6,000 senior deduction doesn’t directly eliminate those taxes, but it reduces the taxable income portion of a retiree’s income. This could potentially push them below the thresholds that trigger Social Security taxation.
By lowering taxable income, the deduction could:
- Reduce or eliminate federal tax on Social Security benefits for some filers.
- Keep more of retirees’ benefits in their bank accounts, particularly if they fall into the middle-income tax bracket—a group that tax experts predict will benefit most from this bill.
Who Qualifies for the Deduction?
Taxpayers must meet the following criteria to be eligible for the $6,000 deduction:
- Be age 65 or older by the end of the tax year
- File as single, head of household, or married filing jointly
- Have taxable income that would otherwise make their Social Security benefits partially or fully taxable.
The deduction applies only to federal income taxes. It doesn’t change how Social Security benefits are taxed at the state level—some states still tax benefits independently, though Indiana does not.
How Long Will the Deduction Be Available?
As of right now, the deduction is scheduled to be effective for tax year 2025 through 2028. Keep in mind that future legislative changes could alter this timeframe.
Who Stands to Benefit Most?
The deduction is expected to provide the greatest relief to middle-income seniors—those earning just above the current taxation thresholds. Taxpayers with up to $75,000 in modified adjusted gross income — or up to $150,000 if married and filing jointly — may receive the full deduction. For wealthier retirees with higher investment income, the deduction gradually phases out.
For example, a retired couple with a combined income of $40,000-$60,000, much of which comes from Social Security, pensions, or part-time work, could see a significant reduction in their tax liability.
While the One Big Beautiful Bill doesn’t eliminate taxes on Social Security benefits, the $6,000 deduction offers a step toward protecting more benefits from federal taxation.