SSA Introduces 'One Big Beautiful Bill' for Over-65 Tax Break
The Social Security Administration (SSA) has announced a significant change for beneficiaries aged 65 and older. The 'One Big Beautiful Bill' (OBBB) introduces a temporary, income-based bonus over-65 tax deduction, which the SSA claims will 'eliminate federal income taxes on Social Security benefits for most beneficiaries'.
The SSA's email to millions of beneficiaries stated that nearly 90% would no longer pay federal income taxes on their benefits. This figure likely refers to estimates that most taxpayers aged 65 or older will owe little or no tax with the new bonus standard deduction. The deduction primarily benefits those with moderate or lower incomes. Individuals aged 65 and older can claim a $6,000 deduction if their income is $75,000 or less, while married couples (65+) filing jointly may claim up to $12,000 if their combined income doesn't exceed $150,000.
It's important to note that the OBBB does not directly change Social Security taxation and makes no changes to the Social Security program itself. The bonus over-65 deduction is set to expire after 2028 unless Congress takes action. The Commissioner of the SSA, Frank Bisignano, has not provided clarification on whether the OBBB directly changes taxes on social benefits or the actual tax burden for social benefits in 2025 due to a lack of clear communication or transparency from the responsible tax authorities or legislative bodies regarding these changes.
In summary, the OBBB introduces a temporary tax break for most Social Security beneficiaries aged 65 and older with moderate or lower incomes. However, it does not change the taxation of Social Security benefits or the Social Security program itself. The bonus over-65 deduction is set to expire after 2028, and further clarification on its impact is awaited from tax authorities.
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