Social Security represents a major source of monthly income for many citizens, especially retirees. The “new” deduction will reduce tax bills for many seniors, starting with their next tax return and continuing through tax year 2028, after which it is scheduled to expire. For millions of American retirees and seniors, Social Security is a financial foundation, not only for their income but also for tax planning. Therefore, it’s important to be aware of the changes to this benefit.
In previous years, up to 85% of Social Security benefits could be considered taxable income
Applying this deduction is not straightforward, as it depends heavily on each person’s circumstances. For example, the deduction is available in full only to taxpayers with incomes below a certain level, and it gradually decreases beyond that threshold. In previous years, up to 85% of Social Security benefits could be considered taxable income, depending on the beneficiary’s total income. There has also been confusion among older adults about whether the measure passed by Congress on July 3 and signed by President Donald Trump the following day eliminates taxes on Social Security benefits.
Each individual’s situation is important to determine their legal eligibility to claim this deduction
The fact is that to receive this new benefit, certain requirements must be met. To receive the deduction, the person must be at least 65 years old at the end of the tax year and have a modified adjusted gross income (MAGI) of less than $175,000. If married and filing jointly, the spouse can also claim the deduction if they are 65 or older and their combined MAGI is less than $250,000. Therefore, each individual’s situation is important to determine their legal eligibility to claim this deduction.
For married couples filing jointly, the maximum deduction is $12,000 if both individuals are age 65 or older
Regarding the amounts, the maximum deduction is $6,000 for each qualifying taxpayer. This deduction is intended to reduce the portion of income subject to federal taxes and could significantly lower the taxable income of many retirees who previously exceeded the threshold due to additional income sources. As explained earlier, for married couples filing jointly, the maximum deduction is $12,000 if both individuals are age 65 or older.
The new $6,000 deduction is in addition to both the standard deduction of $15,750 for single taxpayers
It’s important to note that the deduction gradually reduces to $0 if an individual’s MAGI exceeds $75,000, or $150,000 for those filing jointly. Furthermore, in addition to this deduction, tax brackets and income thresholds that determine Social Security tax amounts have been adjusted in some legislative proposals targeting middle-income seniors. Therefore, the new $6,000 deduction is in addition to both the standard deduction of $15,750 for single taxpayers or $31,500 for married couples filing jointly for 2025, and the additional deduction for those 65 and older.
The biggest beneficiaries of these changes are likely retirees with moderate incomes
As for deductions, they are reduced by six cents for every dollar exceeding the applicable threshold. Once the MAGI reaches $175,000 for single filers, or $250,000 for joint filers, the deduction is eliminated entirely. The biggest beneficiaries of these changes are likely retirees with moderate incomes, whose combined income previously placed them just above the old thresholds. Hence the importance of understanding each citizen’s precise financial situation to determine the exact deductions they can claim.