Now law is a new five-year $6,000 deduction for some seniors. The Senate version of H.R.1, which has been enacted into law, creates a $6,000 special deduction from income, but not Social Security, for taxpayers over age 65 with incomes of $75,000 ($150,000/married) or less. The deduction phases down (but not below zero), at the rate of six percent of the amount by which a single taxpayer’s income exceeds $75,000 ($150,000/married filing jointly). The deduction is good for 2025 through 2028.

This is an increase over the $4,000 deduction for seniors for 2025 through 2028 that had been in the House version of the bill.

The extra tax benefit for seniors is the mechanism Congress chose to honor President Trump’s campaign promise to make Social Security benefits income-tax free. A direct elimination of Social Security benefits taxes would have violated the strict budget reconciliation law’s Byrd Rules. That would have meant the need for 60 votes in the Senate to pass it, something no one expected could happen in the hyper-charged political atmosphere in the current Congress.

Prospects: The special senior deduction, while not currently at risk in and of itself, could change as Congress grapples with revenue issues and other concerns arising from enactment of H.R.1. Plus, lawmakers will have to decide whether to extend, modify, or drop the special deduction as its 2028 expiration date approaches.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.