Does the “Big, Beautiful Bill” Eliminate Taxes on Social Security?

📉 Does the “Big, Beautiful Bill” Eliminate Taxes on Social Security?

Category: Retirement & Social Security β†’ Tax Updates for Seniors

🧾 Quick Answer

No β€” the new legislation does not repeal federal taxation of Social Security. Instead, it introduces a **temporary $6,000 deduction per senior age 65+** (or $12,000 for couples) through 2028, which can reduce overall taxable income.

πŸ“Š How the Deduction Works

  • πŸ“† Available from tax year 2025 through 2028
  • πŸ§‘β€πŸ’Ό $6,000 deduction for individuals 65+
  • πŸ‘« $12,000 total for married couples where both are 65+
  • πŸ’° Deduction applies to total taxable incomeβ€”not just Social Security

πŸ’‘ Income-Based Impact

πŸ”» Lower-Income Seniors (AGI under $35K single / $50K joint)

  • Already pay little or no tax on Social Security
  • May see little benefit from the new deduction

πŸ”Έ Moderate-Income Seniors (AGI $60K–$150K)

  • Will benefit the most from the deduction
  • May reduce or eliminate taxes on Social Security if combined with retirement income

πŸ”Ί Higher-Income Seniors (AGI $150K+ or with large IRA/401(k) withdrawals)

  • Deduction begins to phase out at $150K joint / $75K single
  • Fully phases out at $250K joint / $175K single
  • Most or all of Social Security may still be taxed at up to 85%
  • Major IRA/RMDs, capital gains, and real estate income reduce eligibility

πŸ“‰ What Doesn’t Change

  • πŸ“₯ Social Security remains taxable under existing rules (up to 85%)
  • 🧾 Income thresholds for taxing Social Security are unchanged
  • πŸ’³ You must still report retirement account withdrawals and interest income

πŸ“Œ Planning Tip for Members with Retirement Income

If you are receiving large distributions from:
  • 401(k), IRA, or SEP accounts
  • Pensions or annuities
  • Dividends or real estate income

β€” you may want to coordinate withdrawals or shift investment income across years to remain under deduction phase-out thresholds. Ask our team about Roth conversions, QCDs (qualified charitable distributions), or other tax strategies that keep your AGI below $150K.

⚠️ This deduction is temporary. It expires after the 2028 tax year unless extended by future legislation.

βœ… Gbooks Can Help You Maximize the Deduction

Our team can:
  • Run a deduction impact estimate across AGI scenarios
  • Structure retirement withdrawals to minimize taxation
  • Apply the deduction properly in your return and track documentation in Zoho

πŸ” Don’t Have an IRS Account?

Creating a secure IRS.gov account helps you monitor your Social Security benefits, tax payments, and transcripts online without long wait times.

πŸ“Ž Learn how to set yours up:
πŸ‘‰ How to Set Up Your IRS.gov Account

🏷️ Tags

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