These Seniors Are Left Out of The Big Beautiful Bill’s Big Tax Break

When President Trump was running for office, one of the things he pledged to do was eliminate taxes on Social Security. There are many seniors who don’t pay taxes on those monthly benefits, but it’s typical for moderate earners and above to lose a portion of their Social Security checks to federal taxes. And that doesn’t account for any state taxes that might apply to those benefits.

Trump faced pushback from lawmakers in the context of that plan, though. And one reason may have had to do with Social Security’s precarious financial situation.

Social Security is less than a decade away from potential benefit cuts due to an impending revenue shortfall. One source of revenue for Social Security is the taxes seniors pay on their monthly benefits. It’s not the program’s main revenue source, but it’s a big one. And eliminating those taxes could push the program even closer to insolvency.

Unfortunately, new legislation that just passed will not let seniors off the hook as far as taxes on Social Security benefits go. But a good number of older Americans may now be in line for a generous tax break. Still, there’s one group of seniors that’s apt to get left out in the cold.

Higher-income seniors lose out

Under the new Big Beautiful Bill, Americans ages 65 and over can claim a bonus tax deduction of $6,000 through 2028. This tax break can be claimed by people who itemize as well as people taking the standard deduction. That’s good news, but not for everyone.

When new tax policies are introduced, it’s pretty common for them to be income-dependent. In this case, the new deduction for seniors begins to phase out for singles earning over $75,000 and married couples earning more than $150,000. The new tax break phases out completely for singles with incomes over $175,000 and married couples with incomes over $250,000.

This means that while many middle class and even upper middle class seniors may get to benefit from the new changes, higher-income seniors are excluded. It also means that while the typical Social Security beneficiary may now be off the hook from paying taxes on those benefits, higher income seniors will likely continue to do so.

Forget about a SALT tax break, too

In 2017, the U.S. tax code went through a major revamp that limited the SALT (state and local tax) deduction to $10,000. Under the new bill, the SALT deduction gets a major lift. It rises to $40,000 and is set to increase by 1% per year until 2030, at which point it reverts back to the $10,000 limit.

But once again, higher-income seniors lose out. So do younger Americans with large incomes, for that matter.

This time around, though, the income thresholds are much higher. Taxpayers with a modified adjusted gross income below $500,000 can qualify. So to be fair, it’s really only very wealthy seniors (and taxpayers in general) who don’t get this benefit.

The bigger issue really is that the income thresholds for the bonus $6,000 deduction aren’t as generous as they could be. That’s going to leave a lot of seniors burdened at a time when costs are up.

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