Millions of senior citizens in the United States will benefit from historic tax relief on their Social Security benefits after the passage of “One Big Beautiful Bill,” dubbed OBBBA. It’s effective for tax years before 1st January 2029. This legislation introduces a new deduction for older Americans that greatly diminishes (or may even eliminate) federal income taxes on Social Security for a lot of retirees.
You already know that Social Security benefits are taxable based on your combined income. Social Security Benefits Remain Taxable. Social Security benefits are still included in your taxable income. Under current law, up to 85% of your benefits may be taxed, depending on your combined income (your adjusted gross income + nontaxable interest + half of your Social Security benefits). This calculation determines your provisional income, which then dictates how much of your benefits become taxable
The One Big Beautiful Bill, however, adds a $6,000 deduction for taxpayer aged 65 or older. For couples filing jointly, that’s up to $12,000 in extra deductions! The deduction applies to 2025-2028 tax years.
The deduction will phase out slowly as your income grows, reduced by 6% of Modified Adjusted Gross Income (MAGI) above $75,000 for singles or $150,000 for couples.
Because the deduction comes after you calculate taxable Social Security, it can effectively offset that income. Many seniors who previously owed tax on part or all of their benefits may now see little to no federal tax on their Social Security. It’ll provide financial relief to them. Seniors should look into their tax planning for the period 2025-2028. They should also to a tax professional to learn how to maximize their new savings.
