Under the “One Big Beautiful Bill,” an estimated 88% of seniors receiving Social Security benefits will owe no taxes on their payments starting in 2025. This sweeping reform introduces a new $6,000 tax deduction for individuals age 65 and older—or $12,000 for married couples.
The deduction stacks with existing tax benefits, including the standard and senior deductions, allowing most recipients to fully offset their taxable Social Security income.
What the new deductions look like
According to the U.S. Treasury’s June 2025 data, the law includes:
- New senior deduction: $6,000 for individuals, $12,000 for couples
- Standard deduction (2026 estimate): $15,750 for individuals, $31,500 for couples
- Existing senior deduction: $2,000 for individuals, $3,200 for couples
For a typical single senior earning the average $24,000 in Social Security benefits annually, these deductions will exceed the maximum taxable portion of their benefits, eliminating any federal tax owed.
Who benefits most?
The new deduction is expected to benefit 33.9 million seniors, even those not currently claiming Social Security. On average, seniors using the deduction will see a $670 increase in after-tax income.
However, the benefit phases out for higher-income seniors:
- Phase-out starts: $75,000 (individual), $150,000 (married)
- Phase-out ends: $175,000 (individual), $250,000 (married)
Examples from the Treasury analysis
- A single senior with $24,000 in Social Security will owe no tax under the new law.
- A married couple with $48,000 in Social Security will also owe no tax.
- A senior with $40,000 in Social Security and $40,000 in retirement savings would see their tax bill drop from $7,190 to $5,685.
- A married couple with $40,000 in Social Security and $40,000 from a 401(k) would see taxes fall from $3,150 to $1,110.
What happens next?
The bill is expected to be signed into law later this year, with its provisions taking effect for the 2025 tax year. Seniors are encouraged to review their income eligibility to maximize their deductions.
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