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Will My Social Security Be Taxable Under the One Big Beautiful Bill Act? Thumbnail

Will My Social Security Be Taxable Under the One Big Beautiful Bill Act?

Insights Retirement Funding

If you're a senior citizen wondering how the One Big Beautiful Bill Act (OBBBA) affects your Social Security benefits, you're not alone. The short answer? For the average senior, Social Security will not be taxable because of an additional senior deduction. 

What the OBBBA Changes:

Signed into law on July 4, 2025, the OBBBA introduced sweeping tax reforms aimed at easing the financial burden on retirees. One of the most impactful changes is the elimination of federal income tax on Social Security benefits for many seniors. 

According to the Council of Economic Advisers, about 88% of all seniors who receive Social Security will pay no federal tax on those benefits under the new law. 

Who Benefits? 

A single senior receiving the average Social Security benefit (around $2,000/month) will now have deductions that exceed their taxable income. 

A married couple, both receiving average benefits (a combined $4,000/month), will also see zero taxable Social Security income. 

This is thanks to a combination of: 

 1. A new $6,000 senior deduction (which applies even if you itemize, and regardless of whether or not you actually collect social security) 

2. Expanded standard deductions 

Income Phase-Outs: What You Need to Know 

While the deduction is generous, it’s not unlimited. The OBBBA includes income-based phase-outs to target relief toward low- and middle-income seniors: 

1. For single filers, the $6,000 deduction begins to phase out at $75,000 in modified adjusted gross income (MAGI). 

2. For married couples filing jointly, the phase-out starts at $150,000 MAGI 

If your income exceeds these thresholds, the deduction is gradually reduced — and eventually eliminated. This means that higher-income seniors may still owe taxes on a portion of their Social Security benefits, depending on how far above the threshold their income falls. 

Is it Permanent? 

No — the deduction is temporary. It applies to tax years 2025 through 2028, unless extended by future legislation.

Bottom Line:

Under the OBBBA: 

  • The average senior will no longer pay federal income tax on Social Security. 
  • Seniors with income above $75,000 (single) or $150,000 (married) will see reduced or eliminated taxes on their social security. 
  • This is a big win for retirees on fixed incomes. 

However, seniors with investment advisors are often in higher-income brackets due to interest, dividends, and capital gains. They should still plan for potential tax liability on their Social Security income. 

If you have questions: 

Everyone’s tax situation is different, if you have other sources of taxable income let us help you model your 2025 1040 for planning purposes. We have the software and expertise to estimate the impact so give us a call or drop us a line anytime. 

Ian Harris, CFP®