Trump Tax Law Retains Social Security Tax, Adds $6,000 Senior Deduction

President Donald Trump on 4 July signed the nearly 870-page “One Big Beautiful Bill Act,” a budget-reconciliation measure that cements many of the 2017 Tax Cuts and Jobs Act provisions and introduces new breaks including exemptions for tips and overtime pay. The law also increases the state-and-local-tax deduction cap to $40,000 starting in 2026, restores 100 % bonus depreciation and permanently raises the federal estate-tax exemption to $15 million per person from 2026. Corporate measures such as an expanded qualified small-business-stock exclusion begin in 2026, while several individual items apply to the 2025 tax year. Administration officials and a Social Security Administration press release have portrayed the legislation as ending federal income taxes on Social Security benefits. A review of the statutory language by tax analysts shows the benefits tax survives. Instead, the act provides a temporary $6,000 deduction for filers aged 65 and older, effective for 2025 through 2028 and phasing out above $75,000 in income for single taxpayers—or $150,000 for couples filing jointly. The Council of Economic Advisers projects the deduction will leave 88 % of seniors owing no tax on their benefits, but younger recipients and higher-income retirees will still face liability. The discrepancy has drawn criticism from Democratic lawmakers who accuse the White House of overselling the measure’s impact on retirees. Tax attorneys caution that many seniors could be surprised when their benefits remain partially taxable and urge individuals to review withholding and estimated payments ahead of the 2025 filing season.