One Big Beautiful Bill Act and the Social Security Taxation

In recent months, Donald Trump and some supporters have stated that the new tax law eliminates federal income taxes on Social Security benefits. The phrase “no taxes on Social Security” suggests that all taxation of Social Security income has been removed for everyone.

However, a review of the law itself and expert analysis shows that this is not exactly the case.

What Has Been Claimed

Public statements have suggested that Social Security benefits are no longer subject to federal income tax under the new law. While this message is appealing and partially true for many retirees in practice, it does not reflect a full repeal of Social Security taxation under the tax code.

The Actual Law

The legislation in question is the One Big Beautiful Bill Act (Public Law 119-21), signed into law on July 4, 2025.This tax and spending package introduces several changes, but it does not eliminate or repeal the federal taxation rules that apply to Social Security benefits.

Key Tax Provision for Seniors

The law creates a temporary additional tax deduction for taxpayers aged 65 and older, separate from the standard deduction:

• Up to $6,000 for single filers

• Up to $12,000 for married couples filing jointly, if both spouses qualify

This enhanced deduction applies to tax years 2025 through 2028, unless Congress extends or makes it permanent.

How This Affects Social Security Taxation

The existing framework for taxing Social Security benefits under the Internal Revenue Code remains unchanged. These rules, first introduced in 1983 and expanded in 1993, apply only to higher-income beneficiaries:

• Up to 50% of benefits may be taxable at certain income levels

• Up to 85% of benefits may be taxable at higher income levels

The new senior deduction can significantly reduce taxable income. In some cases, after applying this deduction, a senior may owe little or no federal income tax on a return that includes Social Security benefits. This outcome results from reduced taxable income, not from a change in the law that defines Social Security taxation.

Why This Matters

• No direct repeal of Social Security taxation: The law does not change the sections of the Internal Revenue Code that determine when Social Security benefits are included in taxable income.

• Many seniors may effectively pay no tax: Due to the interaction between the new deduction and existing income thresholds, the Social Security Administration estimates that around 90% of beneficiaries may end up owing no federal tax on their Social Security benefits.

This result depends on individual income, filing status, and eligibility for the senior deduction.

In Plain Terms

Claim: “No taxes on Social Security”

Reality:✔ The law introduces a new tax break for seniors that can reduce or eliminate federal tax liability for many retirees, including taxes connected to Social Security benefits.✖ It does not repeal or change the statutory rules that determine whether Social Security benefits are taxable.

Understanding this distinction helps retirees and families make informed financial decisions and avoid confusion about what the law actually does.