Latest news with #TaxCutsandJobsActof2017
Yahoo
10-07-2025
- Business
- Yahoo
Leasing underway at 162-unit property near Montana State University
This story was originally published on Multifamily Dive. To receive daily news and insights, subscribe to our free daily Multifamily Dive newsletter. Property: Highmark Developers: Clarion Partners, Wentworth Property Co. Location: Bozeman, Montana Units: 162 Rents: $2,245-$3,895 Cost: Withheld New York City-based real estate investor Clarion Partners has made its first investment in the Bozeman, Montana, area with the development of 162 townhomes and apartments on an 8-acre Qualified Opportunity Zone site. Highmark, developed in partnership with Phoenix-based developer Wentworth Property Co., is located in the city's South University District neighborhood. The project started leasing in April and is expected to be completed by the end of 2025. Units at Highmark, spread between seven residential buildings, will range from one-bedroom apartments to three-bedroom townhomes. The apartments will offer 10-foot ceilings, quartz countertops, stainless steel appliances, and in-unit laundry, while the townhomes will have individual yards and balconies. Amenities will include a clubroom, fitness center, package room, an outdoor gathering area, a hot tub, a dog park, a pet spa and more than 300 parking spaces. The South University District is a cluster of residential and commercial properties located around the Montana State University campus. The property is located within half a mile of MSU and 2 miles of downtown Bozeman. In addition to the university, local employers include Bozeman Health and database software company Oracle. 'Bozeman offers an unparalleled outdoor lifestyle as well as proximity to a growing employment base in education and technology,' Jason Glasser, managing director of Clarion Partners, said in the release. 'The development of Highmark will add a variety of new housing options in a popular area where home prices have become increasingly unaffordable.' The Opportunity Zone program is an economic development tool created under the Tax Cuts and Jobs Act of 2017 that incentivizes people to invest in distressed areas in the U.S. Originally set to start expiring on Dec. 31, 2026, the budget bill recently signed into law has made the program permanent. Clarion currently has 170 properties in areas designated as Opportunity Zones, equivalent to nearly $8 billion in gross real estate value. It also has 734 properties, or $38 billion in value, in submarkets next to OZs. Recommended Reading Trilogy buys ZOM development during construction for nearly $86M Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
09-07-2025
- Business
- Yahoo
SALT deduction cap boosted to $40,000 — here's who stands to get the biggest tax break
The massive new tax law temporarily boosts the maximum amount you can claim under the state and local taxes (SALT) deduction to $40,000, from $10,000, starting in 2025. (For those who are married filing separately, the new cap is $20,000, up from $5,000) The SALT deduction lets taxpayers who itemize deduct a variety of state and local taxes, including property and income taxes. While you can claim different types of state taxes under this deduction, you must choose between deducting state income and state sales taxes — you can't deduct both in the same year. A valuable workaround that some businesses — specifically, pass-through entities such as partnerships and S corporations — can use to avoid the SALT cap was preserved in the new tax law. The sweeping new tax law that President Donald Trump signed into law on July 4 includes a valuable, but temporary, boost to the state and local tax (SALT) deduction: Taxpayers can now write off up to $40,000 in state and local taxes ($20,000 if married filing separately). The new cap is in effect for five years, starting with the 2025 tax year. A $10,000 cap had been in place since 2018, thanks to the Tax Cuts and Jobs Act of 2017 (it was a $5,000 limit for married couples filing separately). That cap helped offset some of the lost revenue from the TCJA tax cuts, but it was a big hit to taxpayers in high-tax states like California, New York and New Jersey. Taxpayers with significant state income and property taxes could only deduct $10,000 — before the TCJA, there was no cap on the SALT deduction. In recent months, with the $10,000 cap set to expire at the end of this year, lawmakers fiercely debated what would come next. One early version of the tax bill called for a permanent cap of $40,000; another version would have locked in the $10,000 cap. After heated negotiations in Congress, the final law landed somewhere in the middle: A $40,000 cap — but only for five years. The new law 'is definitely more generous than under the TCJA, given that Congress increased that SALT cap limit to $40,000 for the next five years,' says Christian Burgos, director of tax services at Berkowitz Pollack Brant. Here's how the new rules work and, if you itemize on your taxes, how you may be able to take advantage of the SALT deduction to reduce your taxable income and thus lower your tax bill. Learn more: Trump's tax law: What the megabill means for your money The SALT deduction is a federal tax perk that allows taxpayers to write off the money they spend on state and local taxes, including property and income or sales taxes. Thanks to the new tax law, the amount you can deduct is now capped at $40,000 for 2025 ($20,000 if you're married filing separately). From 2026 through 2029, that cap will rise by 1 percent per year. For example, in 2026 the deduction will be worth $40,400. In 2030, the cap goes back to $10,000 ($5,000 if married filing separately). The deduction will phase out for taxpayers with modified adjusted gross income of $500,000 or more ($250,000 or more if married filing separately). That income limit will increase by 1 percent per year until 2030; for example, it will be $505,000 in 2026. But no matter how high a taxpayer's income is, the value of the tax deduction won't go below $10,000. The new law also includes a limitation on itemized deductions for higher-income taxpayers. This is a complicated rule, but here's the gist: The amount of itemized deductions a taxpayer can claim is reduced by 2/37 of the lower of either the taxpayer's total itemized deductions or the amount of that person's taxable income that exceeds the start of the 37 percent tax rate bracket. (In 2025, the 37 percent tax bracket starts at $626,350 for single filers and $751,600 for those who are married filing jointly.) But the new law also allows for a tax perk that has helped the owners of some businesses avoid the SALT cap. After the TCJA instituted the $10,000 SALT cap, many states responded with a workaround for certain types of businesses. Pass-through entities — called that because the business's income flows through to the individual taxpayer's tax return — were allowed to reduce business income by the amount of their state and local taxes, effectively allowing business owners to avoid the SALT cap. Currently, 36 states offer a so-called 'PTET' (for 'pass-through entity tax') workaround, Burgos says. Some earlier versions of the tax megabill looked to curtail that type of tax strategy, but the final bill contained no such limitation. If a taxpayer has income from a pass-through entity and lives in a state that offers this type of tax strategy, then state taxes 'would be deductible through that workaround mechanism,' Burgos says. Learn more: Find your state's income and sales tax rates The types of taxes covered by the SALT deduction are state and local property taxes, income taxes and sales taxes. But you must choose between income and sales taxes — you can't deduct both in the same year. For example, people who live in states with no income taxes likely would choose to deduct sales taxes rather than state income taxes, and someone in a high-income-tax state likely would benefit from claiming the SALT deduction for state income taxes. (Certain state and local taxes can't be deducted, including those spent on gasoline, car inspection fees and licensing fees. See this IRS page.) Also, while the SALT deduction can reduce your tax burden, you must itemize to take advantage of it — and it generally only makes sense to itemize if your deductible expenses exceed the standard deduction. The number of taxpayers who itemize has dropped in recent years, mostly because the Tax Cuts and Jobs Act — the same law that originally limited the SALT deduction to $10,000 — nearly doubled the standard deduction for individual filers. As a result, many taxpayers find it more cost-effective to claim the standard deduction rather than itemize their deductions. Fewer than 10 percent of taxpayers itemized their deductions in 2022, according to the most recent IRS data. Learn more: Standard deduction vs. itemized deductions: How to decide The new tax law slightly increased the standard deduction amounts that had been in place for 2025: Now the standard deduction is worth $15,750 for single filers, $23,625 for head of household filers and $31,500 for married fling jointly filers. Those higher amounts make it even less likely that taxpayers will itemize. And older taxpayers have even less reason to itemize these days. Thanks to the new law, some taxpayers aged 65 or older will now qualify for an extra $6,000 bonus standard deduction, on top of the regular standard deduction. This bonus deduction is in effect from 2025 through 2028, and starts to phase out at adjusted gross income of $75,000 for single filers and $150,000 for married-filing-jointly couples. Learn more: Current tax brackets and federal income tax rates
USA Today
01-07-2025
- Business
- USA Today
Trump's tax cuts spurred economic growth. Big Beautiful Bill will do it again.
If Congress passes President Donald Trump's proposed tax cuts, we are confident that a surge in economic growth will help offset the federal deficit. The Senate is debating an extension of the Tax Cuts and Jobs Act of 2017 and passage of additional policies such as no tax on tips and overtime and a new tax credit on Social Security benefits. As the Senate considers these matters and assesses the appropriate level of spending cuts, the lessons of history provide an essential guide. Before Congress passed the Tax Cuts and Jobs Act (TCJA) in 2017, President Donald Trump's Council of Economic Advisers (CEA) examined a large, peer-reviewed literature to estimate the economic effects of the bill. CEA's key estimate at the time was that real median incomes would increase by $4,000 in the long run as businesses built new factories and created new jobs, boosting workers' wages along the way. In fact, incomes rose by $6,400 in just two years with across-the-board surges in economic activity before COVID-19 lockdowns temporarily upset the economic momentum created by the TCJA. It is interesting to us as economists that the 2017 White House modeling was confirmed by new evidence drawing on post-2017 data. A 2024 review by Michael Faulkender, deputy secretary at the Department of the Treasury, and Aaron Hedlund, chief economist at CEA, finds that the economy, in fact, outperformed expectations. Tax cuts will spur economic growth The economy today is even more responsive to tax changes than was projected by President Trump's CEA in 2017. As the Senate considers next steps, it first must accurately peg the effect of proposed changes against the correct counterfactual. If the extension of the Tax Cuts and Jobs Act of 2017, together with the other additional proposed measures, does not pass, the United States will experience the largest tax increase in our country's history. President Trump's current CEA has estimated that this would sharply slow economic growth, reducing GDP by 4%, costing 6.1 million full-time equivalent jobs and reducing federal revenues by roughly 6%. Perhaps the biggest drawback of the expiration of the TCJA would be the repeal of pro-growth business tax reforms, for businesses both small and large, that drive capital formation. Given the latest estimates from the literature evaluated in a CEA report published in May, the expectation is that passage of the One Big Beautiful Bill Act will result in an investment surge of up to 14.5%, driving real median incomes up by $10,000 relative to the scenario in which the TCJA is allowed to expire. Some arguments raised against the bill warrant a response. First, some say the tax cuts are fiscally irresponsible. The Congressional Budget Office estimates that the House version of the bill would reduce revenue by $3.7 trillion over 10 years and increase the deficit by $2.4 trillion. The Senate version, according to the CBO, would add $3.3 trillion to the debt over the next decade. Opinion: Here's the truth about Medicaid cuts. Republicans are doing what's right, morally and fiscally. The true budgetary impact, however, depends on whether the tax cuts generate growth, and from that additional economic activity, more revenue, as has been the case in the past. If growth rises to 3% propelled by administration policy, then revenue over the next decade will rise by $4 trillion relative to the total revenue that would be collected if growth averaged only 1.8%, which is the CBO's current estimate. That amount of revenue is more than the current CBO estimate of the total 'cost' of the House bill − a score that counts as a major cost simply leaving in place the tax cuts of 2017. Tariffs will help offset cost of tax cuts In addition, the CBO put out a separate score that the president's current tariff policies will raise $2.8 trillion over the next 10 years, which would help to offset the CBO's composite score of the bill. That number is not taken into account in the CBO's assessment of the tax bill. In 2017, opponents of the TCJA asserted that it would dramatically increase the deficit. In 2017, before the tax cuts, federal revenue relative to GDP was 17.1%. Despite the massive reduction in marginal tax rates, revenue relative to GDP in 2024 was the same: 17.1%. While the corporate tax rate was taken down from 35% to 21%, corporate tax revenue increased from 1.5% to 1.8% of GDP. So why have deficits skyrocketed? Tell us: This Fourth of July, are you proud to be an American? | Opinion Forum While revenues have kept up as a result of the economic activity the tax bill generated, spending today is roughly 3 percentage points of GDP higher than it was in 2017. The idea that the tax side of the equation is solely responsible for deficits is simply incorrect. Another argument raised is that the bill will cause inflation to pick up as growth takes off. Those with this view, of course, fail to account for the fact that a factory spending boom that increases U.S. production drives down inflation by increasing supply. The Biden administration threw fire on inflation with government spending and used skyrocketing regulations to impede supply. To see the effect of today's proposed policies, look no further than the 2017-19 acceleration in growth that was accompanied by low, stable inflation. A third argument raised is that the United States does not have enough workers to meet the demands of a fast-growing economy. But this is why the plan is to cut taxes and stimulate work for those citizens earning overtime, making tips or returning to the workforce after retiring. The evidence shows that these workers, who represent the bulk of the American middle and working class, are among the most responsive to tax policy in the overall economy. As businesses invest in the United States and create new job opportunities, the workers will be there and, as experience has taught us, be richly rewarded. Kevin Hassett is director of the White House National Economic Council. Stephen Miran is chairman of the White House Council of Economic Advisers.
Yahoo
19-06-2025
- Business
- Yahoo
5 Things the Upper Middle Class Should Do To Prepare for Trump's Income Tax Plan
At over 1,000 pages long, the One Big Beautiful Bill Act certainly qualifies as 'big.' It includes dozens of provisions that affect upper-middle-class taxpayers, from preserving the child tax credit to eliminating income taxes on tips and overtime to most workers and more. But many of those provisions don't actually require any planning or preparation. Read Next: Check Out: So which tax changes should upper-middle-class Americans pay attention to now so they can prepare if the bill passes? The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction and capped state and local tax (SALT) deductions at $10,000. Both of those changes led many upper-middle-class Americans to stop itemizing and just take the standard deduction. The new tax bill would make the double standard deduction permanent, and add an extra $1,000 from 2025 to 2028 for single filers or $2,000 for married couples. But the SALT cap would quadruple to $40,000 for all but the highest-income taxpayers. 'The controversial SALT deduction cap jumping to $40,000 would change the calculus on itemizing for many upper-middle class households,' explained Elina Linderman, accountant and owner of La Rusa. That means you should start saving receipts and tracking deductible expenses now, in case you can save more on taxes by itemizing deductions. Explore More: Health savings accounts (HSAs) come with many tax benefits. You can deduct contributions, the money compounds tax-free and you pay no taxes on withdrawals if they're used for qualifying expenses. The new bill would double the contribution limit from $4,300 to $8,600 for individuals making less than $75,000 per year and from $8,550 to $17,100 for families making less than $150,000 annually. However, the contribution limit would start phasing out for individuals earning an adjusted gross income over $100,000 ($200,000 for married couples). As GOBankingRates previously reported, the household income for the upper middle class is between $106,000 and $150,000, so certain households may qualify to contribute more to their HSAs with this provision. Keep an eye on these changes in the final bill, and consider either opening an HSA or contributing more to it if you can. Tax professor Annette Nellen at San Jose State University noted that upper-middle-class homeowners should jump on any solar panel installations they've been considering. 'Residential energy credits would end on 12/31/25, including the 30% credit for solar panels on your personal residence,' she said. The Tax Cuts and Jobs Act nearly doubled the gift and estate tax exemption. That higher exemption limit is currently scheduled to sunset at the end of 2025. In 2025, the exemption stands at $13.99 million per individual ($27.98 million for married couples). Under the One Big Beautiful Bill Act, that would rise to $15 million and $30 million, respectively, in 2026 and be indexed to inflation thereafter. That may affect your estate planning as an upper-middle-class family, so speak with a financial planner about a personalized gifting strategy. Likewise, the new tax bill would extend another provision of the Tax Cuts and Jobs Act: bonus depreciation. Bonus depreciation allowed real estate investors to write off up to 100% of the cost of a building in the year they purchased it. The act scheduled it to phase out, however, from 100% in 2022 to 0% in 2027. Under the new law, bonus depreciation would revert to 100% from 2025 through January 1, 2030. That could add a huge tax incentive for private equity real estate investments. Investors can show losses on their tax return, even as they collect cash flow in real life — and they don't have to itemize to do it. Private equity real estate investments have historically served the wealthy, with high minimum investments in the $50,000-to-$100,000 range. But the upper middle class can invest with as little as $5,000 by joining a co-investing club to go in on them with other investors. 'The upper-middle class can capitalize on real estate investment and increased property ownership, whether they itemize deductions or not,' said Hector Castaneda of Castaneda CPA & Associates. The final bill that passes both houses of Congress will likely look different from the current bill, so sit down with a tax advisor to form a personalized plan when the final rules become law. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates Clever Ways To Save Money That Actually Work in 2025 This article originally appeared on 5 Things the Upper Middle Class Should Do To Prepare for Trump's Income Tax Plan Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
USA Today
17-06-2025
- Business
- USA Today
Trump's Social Security tax cut unlikely, but seniors may get $4,000 'bonus' deduction
Trump's Social Security tax cut unlikely, but seniors may get $4,000 'bonus' deduction Show Caption Hide Caption Social Security uncertainty and policy changes are driving more people to file With a significant rise in Social Security applications, retirees face financial decisions influenced by legislation and economic concerns in today's climate. Scripps News A new, $4,000 'bonus' deduction would be available for those age 65 and older who fall within set income limits, under the House GOP mega-bill that passed in May. AARP's Nancy LeaMond says the group strongly supports the $4,000 'bonus' standard deduction for older Americans. President Donald Trump's big promise to end taxes on Social Security benefits might not be in the cards for 2025. But a smaller tax cut could be in the works for many middle-income taxpayers 65 and older. Many moving parts, of course, are involved with the tax and spending package that Trump and GOP leaders in the House call "One Big, Beautiful Bill," so many that we cannot be certain how specific tax breaks might shake out in the upcoming weeks as the Senate wrangles with crucial issues. How does 'senior bonus' look next to no-tax promise? "It's important to understand that much of this is still being debated and subject to change," said Tom O'Saben, enrolled agent and director of tax content and government relations for the National Association of Tax Professionals, which has 23,000 members. The way O'Saben sees it, the odds look good for the special senior deduction to pass. But he noted: "It's a far cry from the savings that would have occurred had Social Security benefits been excluded from income in general." If approved by Congress, tax filers could see many proposed breaks in the sweeping tax bill apply to 2025 tax returns that will be filed next year. Much of this bill extends existing Trump tax breaks from the Tax Cuts and Jobs Act of 2017, which expire at the end of 2025. The package also includes proposals to further restrict Medicaid and nutrition assistance benefits. It delivers on many of the Trump's promises made during his presidential campaign in 2024, such as a proposed above-the-line deduction for interest on car loans. Who would qualify for the $4,000 senior deduction? A new, $4,000 "bonus" deduction would be available for those age 65 and older who fall within set income limits, under the House GOP mega-bill that passed May 22 by a single vote margin. The tax break could apply whether someone 65 and older is claiming Social Security benefits or delaying to claim. You could still be working or retired. This new, $4,000 deduction would be available whether the tax filers take the standard deduction or itemize deductions when filing a tax return. The new break is temporary, beginning in the 2025 tax year running through 2028. Planning for retirement: Social Security uncertainty rises among seniors, AARP reports A key point to keep in mind: The deduction still would not benefit all seniors. "Middle earners would see most of the benefit," said Garrett Watson, director of policy analysis at the nonpartisan Tax Foundation. At a 12% marginal tax rate, for example, Watson noted, the $4,000 deduction alone for a single taxpayer who is 65 or older would result in $480 in tax savings. For a single taxpayer, the 12% tax rate applied on taxable income from $11,926 through $48,475 in 2025. Annual inflation adjustments can be made to marginal tax brackets. Those with very high incomes and low incomes wouldn't see any benefit from the extra $4,000 standard deduction. Lower income households that do not have taxable income would not benefit, experts said, as they do not have income to offset. "If a retiree is only receiving Social Security benefits, no tax would be owed as Social Security alone is not taxable if it is the only source of income," O'Saben said. "Taxpayers must have other income in order for some or up to 85% of Social Security benefits being included in taxable income." Other income that goes into the calculation to determine whether Social Security benefits are taxable includes money you'd withdraw from a 401(k) plan, wages, dividends, capital gains, as well as tax-exempt interest. You'd calculate your combined income, which is your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. See IRS Publication 915 to better understand the complex calculations. Higher income older adults would benefit far less from the new $4,000 deduction in the mega-bill. So, those 65 and older who continue to work or remain well off in retirement would not save as much money on their tax bills. Under the House bill, the full $4,000 deduction would apply to those with an adjusted gross income that is no more than $75,000 for single filers and no more than $150,000 for married filing jointly. As incomes go above those thresholds, the deduction would be smaller until it phases out completely for an individual with $175,000 in AGI or a married couple filing a joint return with $250,000 in AGI. Some scenarios for potential tax savings O'Saben offers this example for a mythical Tina and Tim. Say the couple — who are each 65 years old — receives $50,000 in income from a pension and receives the national average Social Security benefits at $47, 424 in 2025. In this example, he said, $31,255 of their Social Security benefits are includable in taxable income. They'd pay $5,290 in federal income taxes before OBBB, as some now call the "One Big, Beautiful Bill." The tax created by the inclusion of the Social Security benefits, O'Saben said, costs Tina and Tim about $3,440. With the new senior deduction of $4,000 each, he said, plus the additional standard deduction, this couple would they save $1,200 in federal income taxes. The House GOP mega-bill also includes a temporary increase in the standard deduction for those who do not itemize that would apply to tax returns for 2025 through 2028. Under this proposed change, married couples filing jointly would receive an extra $2,000 for the standard deduction. You would not get that extra $2,000 if you itemized deductions. Tina and Tim's taxable income would be $46,055 and some of their income is taxed under the 12% marginal tax rate in 2025. But if a senior couple was very well off, they'd save far less with the $4,000 tax break under Trump's big, beautiful bill. Take Ed and Edna who have other income of $200,000 and Social Security benefits for 2025 of $108,000. In this example, 85% of these benefits are included in taxable income or $91,800. This couple, O'Saben said, is paying $47,758 in federal income taxes — and $16,954 of that total came from the requirement to include 85% of Social Security benefits as income. Their modified adjusted gross income is $291,800. "Under the OBBB," O'Saben said, "their MAGI is over $190,000 so they have no benefit for the senior deduction." The House Ways & Means Committee lists an example for much larger tax savings by adding up other measures "One Big, Beautiful Bill." The House committee's fact sheet released May 28 used a specific example of a married, retired couple in Florida who buys a car and takes out a new car loan to receive a new proposed deduction on car loan interest; qualifies for the new $4,000 deduction for seniors, and receives an enhanced standard deduction. Those taxpayers, according to the GOP fact sheet, would see a tax cut of $1,650. How much you'd save as a tax break for a new car loan taken out in 2025 through 2028 would vary based on how much you'd borrow and the kind of interest rate you'd receive for the car loan. The Ways and Means example doesn't list specifics on how much taxable income the couple had, the kind of car they bought, the size of the car loan, the amount of interest paid in a given year, or the rate on the loan. O'Saben said he believes that example used an average tax rate of around 12% to 16%. If the couple paid cash for that car, as some seniors do, the tax cut would be smaller. Of course, paying cash means you're not paying high interest on a car loan. "No taxpayer should seek a tax break in return for paying higher interest," O'Saben said. The sweeping GOP tax bill calls for an above-the-line deduction of up to $10,000 in car loan interest during a given taxable year. The auto loan interest deduction would be temporary under the GOP plan, and it would apply to auto loans that are taken out in 2025, 2026, 2027 and 2028. Ways and Means Committee Chairman Jason Smith, R-Missouri, listed another complex example to show how much seniors could save under the mega-bill, showing $1,989 in total tax savings for a married New Jersey taxi driver who is 65 and would benefit from a proposal where income taxes would not apply to income from tips, as well as the extra $4,000 deduction for seniors. Make no mistake, the extra $4,000 deduction for seniors is far short of Trump's sweeping promise to eliminate taxes on Social Security. It's also not as big of a ding on federal revenues. Social Security myths on social media: How they could hurt you when paper checks end The Tax Foundation estimates that the $4,000 deduction for seniors would cost about $22.8 billion in 2025 and $23.2 billion in 2026. By contrast, the Tax Foundation noted that the Social Security and Medicare Boards of Trustees projected that $126.3 billion would be collected in 2026 from the taxation of Social Security benefits, which would go back to the trust funds. "Unlike other types of income," the Tax Foundation notes in a report, "the revenues generated from the taxation of Social Security benefits are earmarked specifically for the Social Security and Medicare trust funds." The "bonus" deduction "would not weaken the trust funds," according to Alex Durante, Tax Foundation senior economist. "But given the temporary nature of the policy, it would increase the deficit impact of the House reconciliation bill without boosting long-run economic growth." Completely eliminating taxes on Social Security benefits isn't part of the House GOP mega-bill because it could not be packed into a budget reconciliation process. The Congressional Budget Act of 1974 prohibits using reconciliation to change the Social Security program, according to the Center on Budget and Policy Priorities. The act prohibits including any provision as part of a budget reconciliation package that changes Social Security's retirement, survivors or disability costs or revenues. Other separate bills introduced in the House in early 2025, though, still do call for eliminating taxes on Social Security benefits. Frankly, it would cost a bundle to stop taxing any Social Security benefits when other tax cuts in the mega-bill already would add trillions of dollars to the national debt. AARP supports the proposed $4,000 bonus deduction Right now, though, many do back the $4,000 bonus deduction. Nancy LeaMond, AARP's executive vice president and chief advocacy and engagement officer, said the advocacy group strongly supports the $4,000 "bonus" standard deduction for older Americans. She said the move would provide "meaningful tax relief at a time when many seniors are feeling financial strain." The provision is based on an earlier introduced "Bonus Tax Relief for America's Seniors Act," which LeaMond said AARP supports. "For millions of older taxpayers, this change will help keep more of their Social Security benefits in their pockets," LeaMond said. Senior advocates have long complained that outdated income thresholds that have not been adjusted for inflation since the 1980s frequently trigger federal income taxes on Social Security benefits. About 40% of people who get Social Security have to pay income taxes on their benefits, according to a report issued by the Social Security Administration. Unfortunately, it doesn't take much extra income to get hit with some taxes because income thresholds that trigger the tax on Social Security benefits do not adjust for inflation. For single filers, the threshold for paying taxes on up to 50% of your Social Security benefits applies when your combined income is between $25,000 and $34,000 a year. Once the combined income is higher, up to 85% of benefits may be taxable. Your combined income is your adjusted gross income, plus nontaxable interest, such as interest on certain bonds, plus half of your Social Security benefits received that year. Couples filing a joint return could have to pay taxes on 50% of their Social Security benefits if their combined income is between $32,000 and $44,000. If the couple's combined income is higher than that, up to 85% of benefits is taxable. "For more than 40 years, outdated income thresholds have forced increasing numbers of retirees to pay taxes on their hard-earned Social Security," LeaMond said. The Senior Citizens League says a $4,000 bonus deduction would help but the nonpartisan group would like to see far more relief. "A better approach would be to either eliminate the tax on Social Security benefits entirely or significantly raise the income thresholds that trigger taxation — something we believe would be more aligned with today's economic realities," said Shannon Benton, executive director of the Senior Citizens League, which was established in 1992. "We believe that these benefits, which seniors have paid into through a lifetime of work and payroll taxes, should not be taxed a second time in retirement," Benton told the Detroit Free Press, a part of the USA TODAY Network. She noted that the proportion of beneficiaries who pay taxes on their Social Security benefits will continue to increase unless the thresholds are changed. Income thresholds for taxing Social Security benefits, Benton said, are not indexed for inflation or wage growth, while Social Security benefits are. "As incomes rise due to inflation and wage growth, more beneficiaries reach the income levels where their benefits become taxable," Benton said. Eliminating taxes entirely on Social Security benefits — which would likely be temporary over four years — isn't an easy lift. But many people age 65 and older won't scoff at an extra $4,000 bonus deduction, if that's part of the final deal. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor.
