Social Security benefits are unchangeable for the most part. For seniors who rely significantly on this monthly income, there’s little hope of seeing a boost.
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However, a new tax break passed through President Trump’s One Big Beautiful Bill Act (OBBBA) offers a deduction that could let seniors keep even more of their money. Here’s how it works.
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How Senior Deduction Works
The new senior deduction, which is retroactive to January 1, 2025, runs through 2028 and allows individual seniors aged 65 and older to claim an additional $6,000 deduction. For taxpayers filing jointly, that deduction goes up to $12,000.
There are income caps, however. Qualifying individuals must earn an adjusted gross income (AGI) of $75,000 or less, and qualifying joint filers no more than $150,000.
Qualifying taxpayers need to be age 65 on or before the final day of the taxable year. The good news is that it’s available to seniors regardless of whether they itemize their taxes or take the standard deduction — and the deduction is available on top of any other deductions.
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Who Really Benefits and Who Doesn’t
Many retirees will see a meaningful tax break under the new senior deduction. The IRS projects approximately 88% of seniors could end up paying no federal tax on their Social Security benefits between 2025 and 2028. However, it’s important to note that even before the OBBBA, 64% of seniors already had exemptions on paying Social Security taxes, according to The Washington Post.
There has also been some confusing messaging from the Social Security Administration that made this provision sound like an end to Social Security taxes, but that’s not accurate. The new senior deduction will essentially reduce the amount of taxes seniors pay, per the Bipartisan Policy Center. However, seniors with higher retirement income could still face a tax bill unless they plan carefully.
For anyone hoping to claim this deduction, you must meet the eligibility criteria:
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Must be age 65+ before year-end.
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You must have a valid Social Security number, and file jointly for couples who want to obtain the higher deduction.
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Earn no more than $75,000 annually for individuals, and $150,000 for couples.
A Look at the Savings
To give an example of how this deduction could look in actual money back in the pocket, here’s a fictional example:
Maria, a 67-year-old retiree, receives $22,000 in Social Security and withdraws $25,000 annually from a traditional IRA. Normally, part of her Social Security benefits would be taxable due to her combined income.
She now qualifies for the new $6,000 senior deduction on top of the existing senior standard deduction. This lowers her taxable income enough that she may owe no federal tax on her Social Security at all. This could cut her total tax bill by around $1,000 per year. Over the three years the deduction is in place, that’s up to $3,000.
Why This Matters Now
While the senior deduction won’t erase every tax burden, it could offer meaningful savings for millions of retirees. For those already living on fixed incomes, every dollar saved can go further.
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This article originally appeared on GOBankingRates.com: Claiming Social Security Now? How the Trump Tax Break Could Boost Your Benefits