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More on the OBBBA “Bonus Deduction” - Kilplinger
The “No Tax on Social Security” Promise
President Trump’s campaign pledge to end the taxation of Social Security benefits met with a roadblock in the Senate, prohibiting changes to the structure of Social Security during a budget reconciliation process. Undaunted, the legislators pivoted to a $6,000 per qualified taxpayer “bonus” income tax deduction.
As explained in the bill’s text, the “bonus” deduction is temporary, applying only to tax years 2025 through 2028, and is available to taxpayers aged 65 and over. The additional deduction also has a phase-out provision, with incomes exceeding $75,000 for single filers and $150,000 for married couples facing a gradual reduction in the deduction amount.
To make it clearer, here’s a chart featured in a communication directly from The White House:
With these increased deductions in place, the Trump Administration estimates that 88% of tax filers age 65 and older will, in effect, be relieved of a federal tax burden on their Social Security benefits.
But there’s more!
Looking ahead to tax filings for 2025 through 2028, households will see several ways to benefit from this change in tax law. From tax-friendly Roth IRA conversion changes to capital gains impacts, the OBBBA provisions offer several key benefits for seniors, as explained in a Kiplinger post today by Adam Shell, which you can read in full here…