No Tax on Social Security?

By Stephanie Phillips

On July 4, 2025, a new bill was signed into law.  Among the tax law changes, a new deduction for seniors who are 65 and older was put in place to help reduce taxable income, including taxed social security benefits. 

This deduction is called the enhanced deduction for seniors.  The deduction is not necessarily equal to taxable social security benefits.  Instead, the maximum $6,000 enhanced deduction per senior 65 and older is an extra deduction on top of the standard deduction or itemized deductions. 

There are some limitations to this enhanced deduction.  The taxpayer must be 65 by the end of the tax year to qualify for the deduction.  The enhanced deduction for seniors is only available to taxpayers earning less than a certain amount from all their combined income sources.  Investment income, earned income, pension and retirement income, and of course taxed social security benefits are totaled up to determine the “phase out”, or reduction of the $6,000 enhanced deduction. 

For an individual 65 or older, the $6,000 deduction is phased out when the individual has gross income over $75,000.  For a married filing joint couple where both taxpayers are 65 and older, the $12,000 enhanced deduction for seniors is phased out when gross income is over $150,000.

This enhanced deduction is currently available through 2028.  For those whose income is under the threshold, the enhanced deduction added to the standard deduction, or itemized deductions if higher, can be a great way to reduce federal income tax.  It pays to be aware of the limitations of this deduction. If you have any questions regarding this tax law change, please do not hesitate to reach out to us!