By Kevin Stocklin, The Epoch Times (emphasis added),
The “One Big Beautiful Bill Act,” narrowly approved by the House of Representatives on May 22, includes a tax break for Americans over 65 in the form of a temporary deduction of $4,000.
In place of President Donald Trump’s campaign promise to eliminate taxes on Social Security benefits, this deduction, called the “senior bonus,” would offer a smaller tax break targeted at lower-income retirees.
The House bill would allow retirees, whether they take the standard deduction or itemize their tax returns, to deduct an additional $4,000 from their taxable income. It would phase out the deduction for single filers earning more than $75,000 or $150,000 for taxpayers filing jointly.
The deduction would last from 2025 to 2028. For those who qualify, it would mean savings of $480 for people in the 12 percent tax bracket and $880 for people in the 22 percent tax bracket. The deduction reduces taxable income and is different from a tax credit, which would be a dollar-for-dollar reduction in taxes.
Jessica Riedl, a senior fellow at the Manhattan Institute focusing on budget, tax, and economic policy, told The Epoch Times that “Republicans changed the promise of a tax exemption for Social Security benefits to a $4,000 additional deduction for retirees for two reasons.”
“First, because congressional rules prohibit changing Social Security or its taxes in the reconciliation bill,” Riedl said. “Second, eliminating the Social Security income tax would primarily benefit wealthier retirees, since their benefits are currently subject to higher taxes and this deduction is targeted at lower-income retirees.”
Under the Byrd Rule of 1974, changes to Social Security provisions cannot be included in Senate budget reconciliation bills and must be passed through regular legislation, which is subject to a filibuster. No Democrats voted for the House bill, which passed by a vote of 215-214.
According to a May 16 White House statement supporting the House budget bill, it provides “a historic tax break for Social Security recipients” and “cuts Social Security benefit taxes for retirees.”
The bill now goes to the Senate, which has the option to approve or amend it. Trump has urged the Senate to pass the bill, and it has also received support from senior citizen advocates.
“It’s not perfect, but given the political reality of a lack of bipartisan support, we urge Republicans to unite and pass ‘One Big, Beautiful Bill,'” Saul Anuzis, president of the American Association of Senior Citizens, said in a statement.
The American Association of Retirees also approved the retiree bonus, with Nancy LeaMond, its chief advocacy and engagement officer, noting in a May 5 letter that it is “a targeted and common-sense adjustment that reflects today’s economic realities.”
And calling the provision “a win for seniors across the country,” Jim Martin, chairman of the 60+ Association, said that “the president and House Republicans are providing a much-needed tax break for middle- and low-income seniors.”
The senior bonus offers significantly fewer tax benefits than eliminating Social Security taxes altogether; however, it will benefit the Social Security fund, which analysts, including those at the Peter G. Peterson Foundation, predict will be depleted by 2035, when benefits will be cut by 17 percent.
“Ultimately, the $4,000 deduction is significantly cheaper than the original Social Security tax proposal — $20 billion a year instead of $120 billion,” Riedl said. “It also doesn’t divert money out of the Social Security fund, as the original proposal would have done.”
The reduction in bonus revenue for parents would come from general federal income tax revenue rather than from the Social Security fund, as would have happened if the Social Security tax had been eliminated.
According to the Internal Revenue Service, up to 85 percent of Social Security benefits are taxable for individual filers earning more than $34,000 and for joint filers earning more than $44,000. Up to 50 percent of benefits are taxable for individual filers earning between $25,000 and $34,000 and for joint filers earning between $32,000 and $44,000.
