President Donald Trump signed into law the One Big Beautiful Bill Act over the summer, which has some tax changes that could benefit retirees struggling to manage their finances.
Explore More: I Asked ChatGPT What Trump’s ‘Big Beautiful Bill’ Means for Retirees’ Taxes: Here’s What It Said
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GOBankingRates asked ChatGPT how Trump’s tax law could save retirees thousands. Here’s what the artificial intelligence (AI) tool had to say.
Bonus Senior Deduction
President Trump spent a considerable amount of time campaigning on the promise of eliminating taxes on Social Security benefits for retirees. No taxes on Social Security benefits sounds like a great thing to the over 56 million retirees who receive retirement benefits, according to the Social Security Administration. Unfortunately, that was not included in the One Big Beautiful Bill Act. ChatGPT errantly noted that it is included.
That’s not to say Trump didn’t give something to offer tax relief for seniors. “The law gives an additional deduction for taxpayers aged 65+ (up to $6,000 for singles, $12,000 for married couples), which can reduce their taxable income from all sources,” the chatbot said.
Indeed, according to NPR, while the new law does not eliminate taxes on Social Security, the new tax deduction for those over 65 means more seniors “will pay no taxes, or fewer taxes, on their Social Security benefits.”
There are points to consider, though, as the deduction phases out at a modified adjusted gross income of $75,000 for singles and $150,000 for joint filers, per the IRS. Additionally, the deduction is temporary, set to expire in 2028.
Still, for those qualifying, the deduction can be greatly beneficial. “If a taxpayer is pushed down one or more tax brackets, that can be a big tax saving,” ChatGPT said.
Check Out: 8 Ways Trump’s ‘One Big Beautiful Bill’ Could Offer Tax Relief
Extension of the Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act (TCJA) was a major tax reform law enacted under the first Trump administration. It was set to expire at the end of the year, but the One Big Beautiful Bill extended or made permanent many of the tax changes in the TCJA, including lower tax brackets, mortgage interest deduction limitations, an increase in the state and local tax (SALT) deductions, and more, according to U.S. Bank.
Such moves are generally good for seniors. “Retirees with taxable income in lower brackets will pay less than they would under older ‘sunset’ tax schedules,” ChatGPT said.
Situations vary, but those impacted could realize sizable savings.
Better Opportunities for Tax Planning
Flexibility is a key upside of Trump’s tax law changes, according to the chatbot. That ability to move could be a great help to many seniors.
“Lower rates and more deductions give retirees more flexibility over how to draw down IRAs, pensions or other retirement income and may make Roth conversions more attractive,” the AI said. “Even a few percentage points saved on distributions of $30,000-$50,000 per year adds up to thousands over retirement.”
Drawbacks To Consider
As with any tax law changes, there are important things to consider. For example, the bonus deduction for seniors has an income phaseout, and it’s not currently permanent.
Moreover, the AI noted that for lower-income seniors, they may already not be taxed on things like Social Security benefits, and it gave a possible warning. “The tax cuts increase the federal deficit. Unless offset, automatic spending triggers or cuts elsewhere (like Medicare or other programs) could indirectly affect retirees,” ChatGPT said.
For the right circumstances, savings are still possible. “The new deduction + rate structure changes could provide meaningful savings, maybe $500-$2,000+ per year depending on circumstances,” ChatGPT explained.
Trump’s tax law could potentially bring savings to retirees. However, it’s essential to dig beyond the headlines and consult with your tax advisor to determine what you can reasonably expect from the changes.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT How Trump’s Tax Law Could Save Retirees Thousands: Here’s What It Said
