Social Security Changes in Trump’s Big Beautiful Bill: What to Know

By

Aliss Higham is a Newsweek reporter based in Glasgow, Scotland. Her focus is reporting on Social Security, other government benefits and personal finance. She has previously extensively covered U.S. and European politics, Russia’s invasion of Ukraine and the British Royal Family. Aliss joined Newsweek full time in January 2024 after a year of freelance reporting and has previously worked at digital Reach titles The Express and The Mirror. She is a graduate in English and Creative Writing from Goldsmiths, University of London. You can get in touch with Aliss by emailing [email protected]. Languages: English.

Aliss Higham

US News Reporter

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Millions of older Americans could soon see a modest tax break on their retirement income under new legislation passed by Congress.

Why It Matters

The One Big Beautiful Bill Act (OBBBA)—a sweeping Republican-backed tax reform package—was passed by the Senate on Tuesday after a record breaking vote-a-rama. A single vote, cast by Vice President JD Vance, saw the bill pass 51-50.

Currently, up to 85 percent of Social Security benefits can be taxed if a retiree’s income exceeds a relatively modest threshold: $34,000 for individuals and $44,000 for married couples filing jointly. These thresholds have remained unchanged since they were set in the 1980s and have not been adjusted for inflation, meaning more seniors have gradually found their benefits subject to taxation over time.

The bill includes a provision to raise the standard deduction for seniors aged 65 and over by up to $6,000 between 2025 and 2028.

Though the measure doesn’t directly change how Social Security benefits are taxed, it may indirectly shield more of that income from federal taxes for lower- and middle-income retirees.

The deduction phases out for individuals earning more than a total of $75,000 and married couples earning above $150,000. That makes it largely irrelevant for wealthier seniors, who already pay taxes on most of their benefits.

In a post on X, formerly Twitter, the White House said Monday that, under the bill, 51.4 million seniors—88 percent of all seniors receiving Social Security income—will not pay any tax on their benefits income as a result of the change.

Why Aren’t Social Security Taxes Being Eliminated?

While President Trump promised during his 2024 election campaign that he would nix Social Security income taxes, this has been harder to implement practically.

Senate budget reconciliation rules place strict limits on what can be included in tax legislation, particularly when it comes to Social Security. The reconciliation process basically allows for bills to pass the Senate without filibusters, i.e. through a simple majority vote. It concerns bills that affect government revenue, and there are constraints.

One major obstacle is the “Byrd Rule,” named after the late Senator Robert Byrd of West Virginia, which generally prohibits certain provisions in reconciliation bills.

While Congress has the authority to modify a wide range of spending and revenue measures through the reconciliation process, it is largely restricted from making significant changes to Social Security benefits or funding under these rules.

What People Are Saying

The White House said in a post on X, formerly Twitter: “The One Big Beautiful Bill delivers the largest tax cut in history for middle- and working-class Americans.”

Karla Dennis, a tax adviser and the CEO of the tax strategy firm KDA Inc., told Newsweek that while the plan “sounds nice” it is a “short-term fix” that “doesn’t solve the bigger problem.”

“Getting rid of taxes on Social Security would make things a lot easier for retirees. Many seniors don’t expect to owe taxes in retirement, and this would help prevent surprise bills. In the end, we need real change that lasts, not just one-time payouts. Seniors deserve long-term relief they can count on.”

What Happens Next

When signed into law, the expanded deduction would take effect beginning with the 2025 tax year and expire after 2028 unless extended by future legislation.