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Is No Tax on Social Security Still Happening? Trump Policy Takes a ‘Different Form’
By Pete Grieve MONEY RESEARCH COLLECTIVE
What’s in the “big, beautiful bill” instead?
House Republicans’ sweeping budget bill does not eliminate taxes on Social Security benefits — a signature piece of President Donald Trump’s platform — but officials say an enhanced standard deduction for individuals 65 and older effectively delivers on the promise.
While the House tax bill that passed Thursday included “no tax on tips” and “no tax on overtime” provisions, the Social Security tax cut was missing.
Social Security beneficiaries were left wondering if they’d been shortchanged. On social media, a flood of users are tagging elected officials, asking what happened to the president’s promise to end taxes on Social Security benefits.
The House bill modifies the government’s definition of taxable income, allowing a “bonus” deduction of up to $4,000 for single filers 65 and older. The change would apply for the 2025 to 2028 tax years, saving some taxpayers hundreds of dollars per year if passed.
As the Senate is set to take up the “one big, beautiful bill” next week, House Speaker Mike Johnson is urging Senators to make “as few modifications to this package as possible.” But Trump acknowledged Sunday that “fairly significant” changes are possible.
While the bill is still evolving, Social Security beneficiaries should not expect a full end to taxes on their benefits out of this bill. That’s partially due to rules limiting how Congress can modify the Social Security program.
Republicans are moving their tax bill through the reconciliation process for budget legislation, which bypasses the need for any Democrats to vote for it. It’s a process that has key limitations, including that reconciliation bills cannot be used to alter Social Security.
The “senior bonus” is being framed as the House’s attempt to work around that problem — delivering some relief for seniors within the reconciliation framework. However, the tax cut is only a fraction of the size of what Trump promised on the campaign trail.
In a Fox Business interview, Social Security Administration Commissioner Frank Bisignano described the enhanced deduction for seniors as a sort of substitute policy for eliminating taxes on Social Security benefits.
“[Trump] delivered exactly what he said he was going to deliver in a different form on this,” Bisignano said.
But Garrett Watson, director of policy analysis at the Tax Foundation, says it’s a much smaller tax cut compared to the campaign trail pitch.
“I think it’s fair to say that the package (if it became law) would deliver a specific tax cut targeted at seniors, which is in line with the spirit of what President Trump campaigned on,” he writes in an email. “But it’s not the same proposal delivered in a different form, as the deduction would not come close to covering taxes paid on Social Security benefits for seniors who pay those taxes.”
On X, users are calling the measure inadequate: “A lousy 4k deduction doesn’t cut it,” one person wrote. “Do you think we are stupid?” another asked. “The promise was No Tax on Social Security. We heard it at every rally.”
The White House did not respond to Money’s questions about whether it thinks the retiree bonus deduction in the tax bill would satisfy the “no tax on Social Security benefits” promise.
The $4,000 ‘senior bonus’: how it works
The tax bill would increase the standard deduction for everyone, but people 65 and older eligible for a “senior bonus” would see the largest increases.
- Currently, the standard deduction is $15,000 with an additional amount of $2,000 available for single filers 65 and older. The tax bill would temporarily increase the standard deduction by $1,000 for single filers. With the tax bill’s enhanced deduction of $4,000, single filers 65 and older (earning $75,000 or less) could take a deduction of up to $22,000 in 2025.
- The standard deduction is $30,000 for married couples, and there’s an additional $1,600 available for each spouse 65 and older that can bump the combined deduction to $33,200. The tax bill would temporarily increase the standard deduction by $2,000 for married couples. Add in $4,000 more for each partner 65 and older if this version of the tax bill were to pass, and the potential standard deduction for couples earning less than $150,000 would be $43,200.
The bonus deduction would be phased out for taxpayers with higher incomes. For those who itemize their taxes and do not take the standard deduction, a bonus $4,000 deduction would still be available under the House bill.
Enhanced deduction vs. No tax on Social Security benefits
The enhanced standard deduction will reduce taxes for some Social Security beneficiaries, but how does it compare to President Donald Trump’s campaign promise to end the tax on Social Security benefits?
Watson says the tax cut in the bill is only about 14% the size of what Trump pitched during the campaign.
Federal taxes on Social Security benefits are paid by about 40% of the roughly 70 million people who receive monthly benefits. Taxes kick in when a single filer’s combined income exceeds $25,000.
“In 2026, the Social Security and Medicare Boards of Trustees projected that $126.3 billion would be collected from the taxation of Social Security benefits,” he writes. “That compares to a projected $17.7 billion tax cut by the Joint Committee on Taxation under the enhanced deduction for seniors in 2026.”
The Tax Foundation isn’t the only group that’s analyzed this enhanced deduction and found it to be much smaller than the campaign promise.
Ending federal taxes on benefits would come out to a savings of $1,440 for the average taxpaying beneficiary, Richard Johnson, senior fellow at the Urban Institute, told CNBC. The bonus deduction, for comparison, would save a typical taxpayer with a 12% marginal tax rate about $480 annually, Johnson said.
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Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.