While President Donald Trump continues to advocate that the proposed One Big Beautiful Bill Act (OBBBA) has the possibility of eliminating federal taxes on Social Security benefits, legislation passed by the Senate in early July 2025 seems to contradict what the President has been proposing. The new legislation does offer a reduction on the tax burden for some retirees; nevertheless, it does not offer the possibility of completely eliminating taxes on Social Security benefits for all retirees.
Understanding the legislation passed by the Senate
Based on the OBBBA, one component of the bill does indicate that a standard tax deduction is on offer for seniors who are 65 years and older. From 2025 onwards, the deduction will increase to up to $6,000 and will continue to be on offer until 2028, unless a further extension on this tax deduction gets approved.
According to the tax deduction on offer, lower- and middle-income seniors will benefit. The White House has estimated that 88% of Social Security beneficiaries (which amounts to more or less 51,4 million people) will not be paying federal taxes on their Social Security benefit. Although this signifies quite a large number of people excluded from paying taxes, it does not at all indicate that the Social Security benefit for all will not be taxed.
Taking note of how Social Security is currently taxed
Up until now, 85% of the Social Security benefit can be taxed for retirees whose income exceeds the $25,000 threshold for individuals or the $32,000 threshold for couples. So far, the amounts remain unchanged, and inflation has not resulted in the reevaluation of these threshold amounts.
With the OBBBA in place, the core premise of how taxes get charged on Social Security benefits will not change. All that will be amended is the increase in the standard deduction which will assist lower-income citizens by reducing their taxable income and perhaps resulting in them avoiding Social Security taxes altogether.
Who will benefit and what are the long-term implications of the OBBBA?
The OBBBA will not work in favor of all retirees. Seniors who already incur no taxes on their benefits will not benefit from the implementation of the OBBBA either. Retirees who started receiving their Social Security benefit before age 65 will not benefit either. Citizens should also take note that Social Security’s official change will see retirees saying goodbye to the 65 full retirement age. This temporary tax relief, however, is mainly on offer for low- and middle-income citizens with the tax deduction set to expire after the 2028 tax year.
If President Donald Trump’s picture of completely eliminating taxes on Social Security benefits had been painted by the OBBBA, the impact on federal revenue would be rather drastic. Keeping the bigger picture in mind, the OBBBA legislation will see the federal deficit increasing by 3,3 trillion between 2025 and 2034 as has been stated by the Congressional Budget Office.
Looking at how the Bill Act has been misrepresented
President Donald Trump remains adamant that the Bill will fully eliminate taxes on Social Security as has been mentioned in an interview with Fox News. The President’s words seem to have led Social Security recipients to be baffled at the extent of tax relief that they will enjoy on their benefit.
Retirees will need to reassess their thought process and be reminded that the tax relief on offer will mean a deduction in Social Security benefit taxes for some retirees only and retirees will have to understand that the OBBBA will not completely eliminate the tax burden for all of them. Retirees should thus make their benefits work for them by looking at some of the secrets that Social Security hides. As it stands, in order for the One Big Beautiful Bill Act to offer full tax elimination on Social Security benefits, more substantial legislative changes will have to occur.
Disclaimer: This article is for informational purposes only and does not constitute tax advice. It does not replace IRS guidance or official notices. To confirm your eligibility or payment status, click the IRS‑linked resources in our article or log in to your IRS online account; for personalized advice, consult a qualified tax professional.Â
