To Your Wealth Update: What you need to know about the Social Security tax deduction
By Vince Tortorici, CFP®
On July 4, 2025, Congress passed sweeping legislation known as the One Big Beautiful Bill (OBBB), introducing significant changes to federal taxes, retirement benefits, and government spending. One of the most impactful updates for retirees is a new Senior Deduction aimed at reducing — or even eliminating — federal income taxes on Social Security benefits for some Americans.
If you’re over 65, here are some important things to know about this component of the OBBB.
New Deduction for Seniors
Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in replacement of the current additional standard deduction for seniors under existing law. The $6,000 senior deduction is per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify) and the deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
- Qualifying taxpayers: To qualify for the additional deduction, a taxpayer must attain age 65 on or before the last day of the taxable year.
- Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
To qualify, singles must have MAGI (modified adjusted gross income) ≤ $75,000; married couples ≤ $150,000. Those earning more see a phased-out deduction that extends to $175,000 for single and $250,000 for married. The Senior Deduction decreases on a linear path: each $1,000 over the lower threshold decreases the deduction by 1%.
These provisions are not permanent—they expire after the 2028 tax year.
| Before OBBB | After OBBB | |
| Standard Deduction – Single | $15,000 | $15,750 |
| Standard Deduction – Married, filing jointly | $30,000 | $31,500 |
| Add’l Deduction for Age 65+ – Single Head of Household | $2,000 | $6,000 => $0 |
| Add’l Deduction for Age 65+ – Married (each 65+) | $1,600/person | $6,000/person = > $0 |
Of note, everyone below age 65 will see an increase on their standard deduction: $750 for single filers and $1,500 for married filing jointly. And those who are over age 65 who do not qualify for the Senior Deduction based on income will only see a reduction in their standard deduction of $1,250 for single filers and $1,700 for married filing jointly.
In short, before the One Big Beautiful Bill (2025 figures) a single senior (over age 65) had a total deduction of $17,000 and a married couple over 65 had $33,200. Under the One Big Beautiful Bill (starting 2025), a single senior has a total deduction between $15,750 and $21,750 and a married couple over 65 has $31,500-$43,500.
Planning Considerations
Here are two ways this change might affect your retirement strategy:
- Income Management:
If your income is near the phase-out threshold, we can help you explore options like tax-efficient withdrawals, Roth conversions, or charitable giving strategies to stay eligible.
- Tax Projections:
Your 2025 tax situation may look very different from 2024. Early planning can help you capture the full benefit of the new law and avoid surprises at tax time.
There are other tax changes created by the OBBB such as increasing the SALT cap from $10,000 to $40,000, income deductions on tips and overtime, and increasing the Child Tax Credit. This emphasizes the importance of proper planning and integrating tax planning with your broader financial plan.
Let’s Talk
As always, we’re here to help. If you’d like to discuss how these changes impact your situation — or if you’re helping a family member navigate retirement decisions — please reach out to schedule a planning session.
