President Trump Promised to End Social Security Benefit Taxes. Here's What Seniors Are Getting Instead
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Trump claims he delivered on his word. The math says otherwise.
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personal finance
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July 26, 2025
09:00 PM
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Market analysis reveals Interestingly, "mises made, mises kept. " That's how a recent White House article celebrated the One Big, Beautiful Bill's (OBBB) new senior tax deduction, set to take effect for the 2025 tax year
The Trump administration has claimed that, as a result of this change, 88% of seniors on Social Security won't owe any taxes on their Social Security benefits -- a -through on one of President Donald Trump's biggest campaign mises
Market analysis shows certainly sounds compelling, but as someone who's been writing Social Security for years, it only took me one look at the data to realize that the OBBB change was far from an end to benefit taxes
The new deduction will help many seniors to a degree, but you need to understand what it is -- and isn't -- to know what kind of a difference it will make for you, in today's market environment
Furthermore, Image source: Getty Images
How the OBBB senior tax deduction works The OBBB added a new $6,000 tax deduction for seniors 65 and older ($12,000 for married couples), in today's market environment
This's on top of the standard deduction for their filing, which the law also increased from $15,000 to $15,750 for single adults and from $30,000 to $31,500 for married couples, and the existing senior tax deduction ($2,000 for an individual or $1,600 per qualifying individual for a married couple)
Tax deductions reduce the portion of your income you have to pay taxes on
For example, if you earned $50,000 this year and qualified for $15,000 in tax deductions, you'd only owe taxes on the remaining $35,000 (noteworthy indeed), in today's financial world
So the OBBB change is definitely useful (fascinating analysis)
It means you'll owe taxes on less money than you did before, considering recent developments
That said, not everyone will be able to take advantage of this new deduction
Nevertheless, Single adults with incomes over $75,000 and married couples with incomes over $150,000 will see their deduction decrease by $60 for every $1,000 by which their income exceeds these thresholds (which is quite significant)
Moreover, Nevertheless, Single adults with incomes greater than $175,000 and married couples with incomes exceeding $250,000 won't be able to claim the new deduction at all
So far, we can already see two key differences between the OBBB senior deduction and Trump's mise to end benefit taxes
Conversely, Seniors under 65 receive no benefit from the OBBB deduction, even if they're on Social Security, and high earners who would have benefited from ending benefit taxes will experience no gains from this new change, amid market uncertainty
But there's another big distinction to be made between Trump's mise and what he dered
The tax savings fall far short of what Trump mised The OBBB senior tax deduction will give the average senior $670 more in after-tax income, according to a Council for Economic Advisors report (something worth watching)
But that's a far cry from the gains that would come from ending the benefit taxes that are still on the books, even after the OBBB's passing
Let's look at the example of a single 65-year-old who takes $50,000 from a 401(k) in 2025 and has annual Social Security benefits of $24,000
At the same time, The government decides what percentage of your Social Security benefits to tax by looking at your visional income -- your adjusted gross income (AGI), plus any nontaxable interest from municipal bonds, and half your annual Social Security benefit
Moreover, In this case, that's $62,000, in this volatile climate
Market analysis shows n, it compares this amount to the ing chart, considering recent developments
Moreover, Marital 0% of Benefits Taxable If visional Income Is Below: Up to 50% of Benefits Taxable If visional Income Is Between: Up to 85% of Benefits Taxable If visional Income Exceeds: Single $25,000 $25,000 and $34,000 $34,000 Married $32,000 $32,000 and $44,000 $44,000 Data source: Social Security Administration
On the other hand, Under Social Security benefit tax rules, 85% of their benefits would be taxable and get added to their AGI, bringing it to $70,400, given the current landscape
Additionally, So what does this mean for their taxes, in today's financial world
The ing table outlines this person's tax bill under pre-OBBB law, with the new OBBB standard and senior deductions in place, and in a scenario where the OBBB hadn't passed and benefit taxes were eliminated instead
Pre-OBBB Law With OBBB Senior Deduction If Benefit Taxes Were Eliminated 401(k) Withdrawals $50,000 $50,000 $50,000 Social Security Benefits $24,000 $24,000 $24,000 Adjusted Gross Income (AGI) $70,400 ($50,000 from 401(k) + $20,400 of SS benefits) $70,400 ($50,000 from 401(k) + $20,400 of SS benefits) $50,000 from 401(k) Standard Deduction for Single Filers $15,000 $15,750 $15,000 Senior Deduction $2,000 $8,000 $2,000 Taxable Income $53,400 $46,650 $33,000 Taxes Owed $6,662. 50 Source: Author's calculations (an important development)
In this example, the OBBB senior deduction and the increase to the standard deduction for all single filers would result in $1,302. 50 in tax savings
On the other hand, However, eliminating Social Security benefit taxes would've d $2,940
However, 50 in taxes, even without the new deductions in place
So the Council of Economic Advisors' claim that 88% of seniors on Social Security won't pay any benefit taxes isn't accurate
Additionally, The report says this is a result of "their total deductions exceeding their taxable Social Security benefits
However, " But if we this logic, we could say that single filers who had $16,550 or less in taxable Social Security benefits in 2024 (equal to the $14,600 standard deduction for single filers plus the $1,950 senior deduction that year) didn't pay taxes on their Social Security benefits, when we know that's not true, given current economic conditions
However, If you have taxable Social Security benefits, you are paying taxes on them
The OBBB didn't do anything to change how benefit taxation works
An increasing number of seniors will encounter this tax as average benefits and living costs continue to rise
Furthermore, The OBBB's new senior deduction may vide a bit of relief, but it's a small gain compared to Trump's initial mise
On the other hand, It's also, for the moment, a limited-time offer
Moreover, The law says it only applies until the 2028 tax year
Congress will have to decide whether to extend it for future years
Whether the government will actually end benefit taxes remains an open question (something worth watching)
On the other hand, Many seniors want it to do so, but with Social Security facing insolvency, the gram could really use the benefit tax revenue right now
Furthermore, However, if Congress makes broader changes to the gram in the next few years to keep it sustainable for future generations, talk of ending benefit taxes may resurface.
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