‘The President and House Republicans are providing much needed tax relief to middle and low-income seniors,’ says Jim Martin, 60 Plus Association chairman.
The One Big Beautiful Bill Act, narrowly approved by the House of Representatives on May 22, includes a tax break for Americans older than 65 in the form of a temporary deduction of $4,000.
In lieu of President Donald Trump’s campaign pledge to eliminate taxes on Social Security benefits, this deduction, called the “senior bonus,” would offer a smaller tax cut, targeted to benefit lower-income seniors.
The House bill allows seniors, whether they take the standard deduction or itemize their returns, to deduct an additional $4,000 from their taxable income. It phases out for single filers earning more than $75,000, or $150,000 for taxpayers filing jointly.
The deduction would last from 2025 through 2028. For those who qualify, it would amount to dollar savings of $480 for those in the 12 percent tax bracket, and $880 for those in the 22 percent tax bracket. The deduction reduces taxable income and is distinct from a tax credit, which would be a dollar-for-dollar reduction in taxes.
Jessica Riedl, a senior fellow at the Manhattan Institute focusing on budget, tax, and economic policy, told The Epoch Times that “Republicans converted the pledge of no taxes on Social Security benefits into the $4,000 additional senior deduction for two reasons.”
“First, because congressional rules forbid altering Social Security or its taxes in a reconciliation bill,” Riedl said. “Second, ending Social Security income taxes would overwhelmingly benefit wealthier seniors, because their benefits currently face higher taxes, and this deduction is instead targeted to lower-earning seniors.”
According to what is called the 1974
Byrd Rule, changes to Social Security-related provisions cannot be included in budget reconciliation bills in the Senate and must be enacted through regular legislation, which is subject to a filibuster. No Democrat representatives voted in favor of the House bill, which passed 215-214.
According to a May 16 White House
statement in support of the House budget bill, it “provides historic tax relief to Social Security recipients“ and ”slashes taxes on seniors’ Social Security benefits.”
The bill now proceeds to the Senate, which will have the opportunity to approve or alter it. Trump has urged the Senate to pass the bill, which has also received support from senior citizens’ advocates.
“It’s not perfect, but given the political realities of no bipartisan support, we urge Republicans to unite and pass ‘The One, Big Beautiful Bill,’” Saul Anuzis, president of the American Association of Senior Citizens, said in a
statement.
The American Association of Retired Persons also endorsed the senior bonus, with its chief advocacy and engagement officer Nancy LeaMond
stating in a May 5 letter that it was “a targeted and commonsense adjustment that reflects today’s economic realities.”
And calling the provision “a win for seniors across the country,” Jim Martin, chairman of the 60 Plus Association,
stated that “the president and House Republicans are providing much needed tax relief to middle and low-income seniors.”
The senior bonus provides significantly less tax relief than eliminating Social Security taxes altogether; however, it benefits the Social Security trust, which analysts, including those at the Peter G. Peterson
Foundation, project will be depleted in 2035, at which point benefits would be reduced by 17 percent.
“Ultimately, the $4,000 deduction is significantly cheaper than the original Social Security tax proposal—$20 billion annually versus $120 billion,” Riedl said. “It also does not divert money out of the Social Security trust fund like the original proposal would have.”
The reduction in revenue from the senior bonus would come out of general revenue from federal income tax, rather than from the Social Security fund, as would have been the case if the Social Security tax were eliminated.
Up to 85 percent of Social Security benefits are
currently taxable for single filers earning more than $34,000 and for joint filers above $44,000, according to the Internal Revenue Service. Up to 50 percent of benefits are taxable for single filers earning $25,000–$34,000, and for joint filers earning $32,000–$44,000.
