MILLIONS of Americans could see extra money on their annual Social Security income under a new law that is expected to pass today.
Those who meet just two requirements under stipulations in President Donald Trump’s budget restructuring bill will get to keep up to $12,000 more of their benefits.
Certain Americans will get to keep up to $12,000 more of their Social Security benefits thanks to a new bill[/caption]
Americans must meet two requirements in order to get the extra Social Security money[/caption]
Trump’s budget reconciliation legislation called the One Big Beautiful Bill is an act aimed at slashing taxes, notably through the extension of the president’s 2017 tax cuts, and reducing the national deficit.
The lengthy bill, nearly 1,000 pages long, also allocates new spending on defense and immigration enforcement and includes budget cuts on a variety of programs such as Medicaid.
Republicans in Congress are working around the clock to pass the One Big Beautiful Bill before the self-imposed deadline on Friday.
After passing the Senate on Tuesday, the bill is expected to face a final House vote today.
If approved, it will head to Trump’s desk for signing in the coming hours.
BY THE NUMBERS
One of the key proposals in the comprehensive bill is a new tax break for American seniors who pay taxes on their Social Security income.
Should the One Big Beautiful Bill be approved, tax filers age 64 and older will see a greater tax deduction on their Social Security checks under stipulations in both the House and Senate versions of the legislation.
In the already approved Senate version, Social Security beneficiaries who file their taxes individually will get to keep an extra $6,000 of their benefits thanks to the tax cut while couples filing jointly will see an extra $12,000.
The deduction starts to phase out for individuals with an income over $75,000 or couples with a combined income of more than $150,000.
In the Senate version, the deduction phases out entirely for Americans who make $175,000 or more and couples who bring in $250,000 or greater.
WALLET WIN
“This amounts to the largest tax break in American history for our nation’s seniors,” according to a recent report from the White House Council of Economic Advisers.
Should the One Big Beautiful Bill pass, approximately 88% of retirees receiving Social Security checks will not have to pay taxes on their benefits.
However, the majority of American seniors – 64% of them, according to an analysis by the White House – already do not pay taxes on Social Security because their income is too low.
The new legislation would not benefit the millions of older Americans who live in poverty and already do not pay taxes on Social Security.
HOW TO SUPPLEMENT YOUR SOCIAL SECURITY
Here’s how to supplement your Social Security:
Given the uncertainty surrounding Social Security’s long-term future, it’s essential for workers to consider ways to supplement their retirement income.
Senior Citizens League executive director, Shannon Benton recommends starting early with savings and investing in retirement accounts like 401(k)s or IRAs.
- 401(k) Plans
- A 401(k) is a retirement account offered through employers, where contributions are tax-deferred.
- Many employers also match employee contributions, typically between 2% and 4% of salary, making it a valuable tool for building retirement savings.
- Maxing out your 401(k) contributions, especially if your employer offers a match, should be a priority.
- IRAs
- An Individual Retirement Account (IRA) offers another avenue for retirement savings.
- Unlike a 401(k), an IRA isn’t tied to your employer, giving you more flexibility in your investment choices.
- Contributions to traditional IRAs are tax-deductible, and the funds grow tax-free until they are withdrawn, at which point they are taxed as income.
High-income seniors above the phase-out thresholds would also see minimal benefits, seeing reduced or no savings.
The bill would, however, have positive implications for upper-middle class Americans who pay taxes on their retirement benefits.
This is a “substantial tax break,” Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, told Axios.
“As a whole seniors in this country are the wealthiest cohort in the history of the known universe,” he said, explaining that the value of their assets have soared in past years.
If the One Big Beautiful Bill passes along with the Social Security tax deductions, these Americans will get to keep a little more money in their pockets.
The tax breaks would end in 2028 when Trump leaves office.
In addition to shielding Americans’ Social Security benefits, the proposed bill could cost taxpayers tens of millions of dollars after a “payment error” linked to SNAP benefits.
The One Big Beautiful Bill could save Americans money in three other ways.
