President Trump’s “Big Beautiful Bill” is one of the largest tax cuts on the middle class in American history, according to the White House. While the BBB doesn’t eliminate the taxation of Social Security benefits, which Trump initially promised during his 2024 election campaign, it does include additional changes to help retirees reduce their taxable income.
Explore More: 3 Little-Known Social Security Rules That Could Save You Thousands
Be Aware: 25 Places To Buy a Home If You Want It To Gain Value
In a recent episode of her Women & Money podcast, financial guru Suze Orman addressed what the BBB means for Social Security benefits. Here’s what she had to say.
The BBB Did Not Change How Social Security Is Taxed
“The new law did NOT change how Social Security is taxed. It added a deduction. It did NOT eliminate taxes on Social Security,” Orman stated.
The Social Security program began in 1935 and was free of taxation. This changed in 1983 when Congress decided up to 50% of benefits could be taxed. Ten years later, it was raised to 85%. The income limits that determine taxation haven’t changed since then. The income thresholds are $25,000 for individuals and $32,000 for couples.
According to the Social Security Administration, an annual average of 56% of beneficiary families will owe federal income tax on their benefits between 2015 and 2050.
Read Next: What Is the Highest Social Security Check per Month?
The BBB Added a New Senior Deduction
Trump promised to eliminate taxes on Social Security benefits during his campaign, but instead, the BBB gave seniors a temporary deduction.
“Beginning this year, anyone aged 65 or older may be able to claim a $6,000 income deduction — even if you haven’t started Social Security,” Orman said in the podcast. “There’s no link between this deduction and Social Security.”
This is in addition to the standard deduction for people age 65 and older. For 2025, that’s $2,000 for individuals and $1,600 per qualifying spouse for married couples filing jointly. According to AARP, a qualifying 65-year-old couple could stack the new senior deduction, the age-based deduction and the regular standard deduction for a total of $46,700. An individual could lower their taxable income by $23,750.
To claim the deduction, your modified gross income (MAGI) must be under $75,000 for individuals or $150,000 for married filing jointly. Over that limit, the deduction phases out by six cents per dollar over the limit, and fully phases out at $175,000 for singles and $250,000 for couples. The deduction is currently only available until the end of 2029 unless it’s extended.
More From GOBankingRates
- 5 Ways Trump Signing the GENIUS Act Could Impact Retirees
- How Happy Couples Handle Money -- Even When They Disagree
- 7 Luxury SUVs That Will Become Affordable in 2025
- How Much Money Is Needed To Be Considered Middle Class in Your State?
This article originally appeared on GOBankingRates.com: Suze Orman: 2 Things To Know About the ‘Big Beautiful Bill’ and Social Security
