New Bill Cuts Social Security Taxes for 90% Beneficiaries, Adds Deduction for 65+

The 'One Big Beautiful Bill,' signed into law by President Donald Trump, provides a new $6,000 tax deduction for taxpayers aged 65 and older with incomes below certain thresholds, offering significant tax relief through 2028. However, despite initial confusion and some claims, the bill does not eliminate federal income taxes on Social Security benefits for most recipients; more than half of current beneficiaries will continue to pay taxes on these benefits. The Social Security Administration and other officials have clarified that while nearly 90% of beneficiaries may see reduced tax burdens due to the deduction and other provisions, full repeal of Social Security benefit taxation was not achieved due to legislative constraints. Additionally, legislative proposals are underway to raise the full retirement age to 69 by 2033, potentially reducing lifetime Social Security benefits for many Americans, particularly those aged 30 to 50. This change, coupled with rising living costs and slower wage growth, could present challenges for lower-income and physically demanding workers. Overall, the bill offers immediate financial relief to older Americans but stops short of eliminating Social Security benefit taxation, while future retirement age adjustments may impact benefit accessibility.