Overview
- After the White House promoted “no tax on Social Security,” an expanded deduction now leaves about 88% of beneficiaries owing no tax on their benefits, according to the Council of Economic Advisers.
- The law adds a $6,000 deduction per eligible filer for 2025 through 2028, which lowers taxable income yet leaves the existing tax rules on benefits in place.
- Benefits can still be taxed once “combined income” — adjusted gross income plus tax‑exempt interest plus half of Social Security — exceeds $25,000 for single filers or $32,000 for married couples filing jointly.
- Retirees are urged to manage withdrawals and consider Roth conversions to avoid required distributions that can push combined income over the tax thresholds.
- The Committee for a Responsible Federal Budget warns the change worsens Social Security’s finances and floats a cap on very high benefits of roughly $100,000 for couples and $50,000 for individuals, noting benefits could be cut by about 24% by 2032 without action.