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On Monday night, Oct. 19, President Trump posted a victory lap on Truth Social about his signature tax law. (1)
“Thanks to a Republican Congress, I signed THE GREAT BIG BEAUTIFUL BILL, delivering THE LARGEST TAX CUTS IN AMERICAN HISTORY. We gave you NO TAX ON TIPS, NO TAX ON OVERTIME, and NO TAX ON SOCIAL SECURITY for our Great Seniors!” (1)
If you’re on Social Security, that last line is the one you care about. So let’s look at what the law actually does.
What it created is a new deduction. From 2025 through 2028, people 65 and older can claim an additional $6,000 deduction, or $12,000 for a married couple if both spouses qualify, according to the IRS. (2)
That’s real money. But it isn’t the same as making your benefits tax-free.
As CNBC reported when the bill passed, the law “does not end federal income taxes on Social Security benefits.” (3) The Urban-Brookings Tax Policy Center estimated that fewer than half of older adults will benefit from the senior deduction, CNBC reported. (3)
I’ve been a CPA since 1981, so let me referee this one. Trump delivered a real tax break for a lot of seniors. But “NO TAX ON SOCIAL SECURITY” oversells it. Here are 5 things to know about who still pays.
1. The formula that taxes your benefits is still there
Whether your Social Security is taxable still depends on your “combined income”: your adjusted gross income, plus nontaxable interest, plus half of your benefits. (3)
If you file as an individual and your combined income is between $25,000 and $34,000, up to 50% of your benefits may be taxable. Above $34,000, up to 85% may be. For joint filers, those lines are $32,000 and $44,000. (3)
Those thresholds aren’t adjusted for inflation, so over time more beneficiaries pay taxes on their benefits, CNBC noted. (3)
What the new law does is give many seniors a bigger deduction to subtract from their income. Your benefits can still be taxable. You may just owe less tax overall.
2. Here’s what the deduction is really worth
The new $6,000 comes on top of the extra standard deduction seniors already get under existing law. And you can claim it whether you itemize or not. (2)
But a deduction lowers your taxable income, not your tax bill, dollar for dollar. Say you’re married, you both qualify, and your top tax bracket is 12%. The $12,000 deduction would save you up to $1,440 a year.
Nice. Just not tax-free.
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3. Some Social Security recipients get nothing from it
To qualify, you must be 65 on or before the last day of the tax year. (2) So if you’re collecting Social Security but you’re still 62, 63 or 64, the new deduction doesn’t help you yet.
If your income is low enough that your benefits weren’t taxed to begin with, the deduction won’t change the tax on your benefits, CNBC reported. (3)
And it won’t help people whose income is too high to qualify. (3) The deduction phases out for modified adjusted gross income over $75,000, or $150,000 for joint filers. (2)
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4. It’s temporary
The IRS says the deduction runs from 2025 through 2028. (2) Unless Congress extends it, it’s gone after that.
That matters if you’re planning big moves around this window, such as a Roth conversion or a large IRA withdrawal. The timing could change your tax bill.
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5. Claim it the right way
To get the deduction, the IRS says to include your Social Security number on your return, and to file jointly if you’re married. (2)
If you have federal tax withheld from your benefits or a pension, check whether you’re now having too much taken out. The IRS Tax Withholding Estimator now reflects the enhanced deduction for seniors. (4)
My honest take
Give Trump his due. For many seniors, this deduction is a real tax cut, and it shows up on their tax returns through 2028.
But “NO TAX ON SOCIAL SECURITY” isn’t what the law says. The formula that taxes your benefits is still on the books, retirees under 65 don’t qualify, higher earners see it shrink or disappear, and it expires after 2028.
So take the deduction and say thank you. Just don’t stop planning for taxes in retirement because of a slogan.
Sources: 1. Truth Social, via Trump’s Truth archive; 2. IRS; 3. CNBC; 4. IRS
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