The “No Tax on Social Security” Pledge Re-Visited - Kiplinger.com
It’s been over a month since the “One Big Beautiful Bill Act” was signed into law, and the full weight of this potentially temporary tax break for seniors is settling in. As most know, 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 only applies to tax years 2025 through 2028, and is only available to those 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.
Given the tax planning significance of this law change, it becomes important to look at its impact strategically. An article posted by Kiplinger.com contributor Ryan K. Snover, Managing Partner and Wealth Adviser at Aristia Wealth Management, provides a recap of the OBBBA “No Tax on Social Security” workaround, contrasting it with the taxation scenario that caused an estimated 65% of Social Security beneficiaries to, in effect, incur a tax liability as a result of receiving their earned benefits. That scenario, incidentally, has not gone away…it’s simply offset by the bonus deduction included in OBBBA.
From a strategic planning perspective, Snover’s article also provides thoughts on ways to get the most out of those earned benefits. Overall, an article worth reading…click here to read it in full.