Did No Tax on Social Security Pass?

January 22, 2026 by Karen Thomas-Brandt, EA

The short answer is no—the Big Beautiful Bill (officially the One Big Beautiful Bill Act, or OBBBA) does not eliminate federal taxes on Social Security benefits completely. However, there’s good news for taxpayers aged 65 and older who receive Social Security income: the bill introduces a new deduction that will make Social Security effectively tax-free for many seniors.
 

What Changed Under the Big Beautiful Bill?

The OBBBA, signed into law in 2025, was widely touted as a game-changer for retirees. While it doesn’t rewrite the core tax rules for Social Security, it adds a temporary “Senior Bonus” deduction that dramatically reduces taxable income for older Americans.

Here’s what you need to know:

1. Existing Rules Remain
   The original tax rules for Social Security benefits remain in effect. Under current law, up to 85% of Social Security benefits can be taxable depending on your combined income (which includes adjusted gross income, nontaxable interest, and half of your Social Security benefits). High-income retirees will still see some tax liability.
    
2. New Deduction for Seniors
   Starting in tax year 2025, individuals aged 65 and older can claim an additional $6,000 deduction. For married couples where both spouses qualify, the amount is $12,000. This deduction is in addition to the existing extra standard deduction for seniors (for age or blindness).
    
   • Effective Dates: 2025 through 2028 
   • Eligibility: Must be age 65 or older by the last day of the taxable year 
   • Available to: Both itemizers and non-itemizers 
   • Claiming: Reported on new Schedule 1-A (Form 1040)
      
3. Income Limits and Phase-Out 
   The deduction phases out for higher-income taxpayers:
    
   • Starts reducing at $75,000 modified adjusted gross income (MAGI) for single filers and $150,000 for joint filers 
   • Completely eliminated at $175,000 (single) and $250,000 (joint) MAGI 
   • Reduction formula: Deduction decreases by 6 cents for every dollar over the threshold 
   • Note: For this calculation, MAGI is adjusted gross income plus excluded foreign earned income, foreign housing exclusion or deduction, and excluded income by bona fide residents of American Samoa or Puerto Rico. 

How Does This Impact Seniors?

For most retirees, this deduction—combined with the standard deduction and other senior benefits—will wipe out any federal tax on Social Security income. According to estimates, nearly 90% of seniors will pay zero federal income tax on their Social Security checks during the law’s effective period. High-income retirees will still be subject to some tax on their Social Security income.

Example Scenario

• Tax Year: 2025 
• Filing Status: Married Filing Jointly 
• Ages: Both spouses are 67 
• Social Security Benefits: $48,000 combined ($24,000 each) 
• Other Income: $70,000 (combined from part-time work)

Key Takeaways

• Not Total Elimination: The bill doesn’t abolish Social Security taxation; it uses enhanced deductions to shield most seniors. 
• Significant Relief: Nearly nine out of ten seniors will pay no federal tax on Social Security benefits from 2025–2028. 
• Temporary Measure: The $6,000 ($12,000 for married couples filing jointly) deduction expires after 2028 unless Congress extends it. 
• High-Income Exception: Seniors with substantial income may still owe taxes due to phase-out rules. 

How to Claim the Deduction

To take advantage of this benefit:
 

• Include the Social Security number of the qualifying individual(s) on your return. 
• File jointly, if married. 
• Report the deduction on Schedule 1-A (Form 1040), even if you itemize. 

Bottom Line

Did “no tax on Social Security” pass? Not entirely—but for many seniors, the result feels close. The Big Beautiful Bill doesn’t change the underlying tax law, but its strategic use of deductions means that many retirees will enjoy tax-free Social Security benefits for the next few years. 

If you’re approaching retirement or already receiving benefits, this is a great time to review your tax situation. For detailed guidance, visit https://www.irs.gov or consult a qualified tax professional to ensure you maximize this temporary relief.