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CNN
13-07-2025
- Business
- CNN
Seniors get a tax break in Trump's megabill, but many will still pay taxes on Social Security benefits. Here's the real deal
Senior citizens are getting a tax break in President Donald Trump's sweeping tax and spending cuts package, but it's not the one the president promised on the campaign trail last year. Congressional Republicans could not eliminate taxes on Social Security benefits in their megabill because it would not have been allowed under the process GOP lawmakers were using to pass the legislation in the Senate without Democratic support. (That hasn't stopped Trump and administration officials from claiming at times that the 'big, beautiful bill' did get rid of taxes on benefits.) Instead, the package gives senior citizens an additional $6,000 deduction on their federal income taxes between 2025 and 2028. Joint filers get twice that amount. The benefit begins to phase out for single taxpayers earning more than $75,000 and married couples earning $150,000. Individuals who earn more than $175,000 and couples earning more than $250,000 don't qualify. The beefed-up deduction will benefit fewer than half of older Americans, according to a recent analysis by the nonpartisan Urban-Brookings Tax Policy Center. And it provides a smaller tax break, on average, for certain taxpayers than the elimination of taxes on Social Security benefits would have. 'On average, it's a modest reduction for older adults,' said Howard Gleckman, a senior fellow at the center. 'The winners here are upper-middle-income people. People who could get nothing are very high-income people and very low-income people.' Those who will benefit the most are seniors earning between roughly $80,000 and $130,000. The provision will reduce their taxes by $1,100, on average, or about 1% of their after-tax income, according to the analysis. This group would have received a tax break of about $1,300 had Congress eliminated taxes on Social Security benefits. 'It's certainly a noticeable benefit,' Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals, said of the enhanced deduction. 'It will represent a savings, but not to the degree that senior citizens may have been expecting had they been able to exclude all their Social Security benefits from taxation.' Higher-income households won't benefit from the deduction because they earn too much to qualify, while lower-income taxpayers don't pay federal income taxes already because they earn less than the standard deduction, which was $33,200 for a married couple prior to the bill's passage. The Trump administration estimates two-thirds of recipients are already exempt. But higher-income taxpayers would have gotten a heftier tax break had Trump's campaign promise been included in the legislation. Still, there are people who could benefit from the deduction who would not have been helped by the elimination of taxes on Social Security benefits – namely senior citizens who have yet to start collecting the monthly payments. Conversely, Social Security recipients who are younger than 65 will not benefit from the deduction but would have received a tax break had taxes on benefits been eliminated. Most senior citizens who receive Social Security benefits will still continue paying at least some taxes on those benefits, albeit a smaller amount, the analysis found. The center expects about 29 million households will owe taxes on their benefits, down from about 31.2 million. What's more, even though the GOP package did not eliminate taxes on Social Security benefits, the increased deduction will still indirectly hurt the finances of the program, as well as of Medicare, since the measure will reduce income taxes paid on the benefits. The levy on Social Security benefits is funneled into its trust fund and the Medicare Part A hospital insurance trust fund. The package is expected to speed up the insolvency of both trust funds to 2032, from 2033, according to the Committee for a Responsible Federal Budget. At least some senior citizens remain confused about what's in the bill, said Larry Gray, partner at AGC CPA in Rolla, Missouri. Just last week, he had a casual conversation with several older Americans who thought that they would not have to pay taxes on their Social Security benefits. The confusion stems in part from the Trump administration and Capitol Hill's messaging about the package, which at times includes references to giving senior citizens a break on their Social Security benefits. Shortly after Congress approved the bill in early July, the Social Security Administration sent an email to many Americans noting that the bill significantly reduces the tax burden on benefits. Earlier that week, the White House posted an article on its website titled 'No Tax on Social Security is a Reality in the One Big Beautiful Bill.' Gray fears that scammers will try to take advantage of the confusion to prey on senior citizens. He is urging the Internal Revenue Service to set the record straight. 'This is a very simple tweak,' Gray said of the enhanced deduction.
Yahoo
04-07-2025
- Business
- Yahoo
Trump's 'Big, Beautiful Bill' Offers Seniors A $6,000 'Bonus' Tax Deduction: Here's How You Qualify For The Benefit
President Donald Trump's "Big, Beautiful Bill" promises the first new tax break for older Americans since 2017, a temporary "senior bonus" deduction that could reduce many retirees' taxable income by up to $6,000 each year from 2025-28. The Senate-passed version lets every filer 65 or older subtract $6,000 ($12,000 for couples) from income regardless of whether they itemize. The House's One Big Beautiful Bill Act sets the figure at $4,000 per person, reported The Washington Post. Both chambers phase out the break in full for modified adjusted gross incomes up to $75,000 for singles and $150,000 for joint filers. It disappears entirely above $175,000 and $250,000, respectively. Don't Miss: Tired of Grid Failures and Charging Deserts? This Startup Has a Solar Fix and $25M+ in Sales — Now Raising at $3/Share Invest early in CancerVax's breakthrough tech aiming to disrupt a $231B market. Back a bold new approach to cancer treatment with high-growth potential. Middle-income retirees gain the most. A married couple earning $100,000 could save about $1,600 in federal tax under the Senate plan, analysts at Kiplinger estimate. Lower-income seniors who already owe little or no tax on Social Security would see smaller or no savings, while high-income retirees would phased out. "It targets the people who need the help more," said Howard Gleckman of the Urban-Brookings Tax Policy Center in a statement to the Washington Post. The Committee for a Responsible Federal Budget pegs the senior bonus, together with the bill's broader tax extensions, at about $30 billion a year and says it could push the Social Security trust fund's exhaustion date to late 2032 from early 2033 by trimming the taxes seniors pay on their benefits. The Tax Foundation calculates that the four-year deduction alone could cost $90 billion if the Senate number prevails, and as much as $250 billion if later made permanent. What Next: House and Senate negotiators must reconcile the $6,000 and $4,000 figures before a final vote expected before the July 4 recess. The Trump administration argues the deduction "slashes taxes on Social Security" without altering benefit formulas, delivering "historic tax relief" to seniors. Read Next: Maximize saving for your retirement and cut down on taxes: Schedule your free call with a financial advisor to start your financial journey – no cost, no obligation. Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here's how you can earn passive income with just $100. Image Via Eric Hartline-Imagn Images Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article Trump's 'Big, Beautiful Bill' Offers Seniors A $6,000 'Bonus' Tax Deduction: Here's How You Qualify For The Benefit originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. 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
04-07-2025
- Business
- Yahoo
Trump's 'Big, Beautiful Bill' Offers Seniors A $6,000 'Bonus' Tax Deduction: Here's How You Qualify For The Benefit
President Donald Trump's "Big, Beautiful Bill" promises the first new tax break for older Americans since 2017, a temporary "senior bonus" deduction that could reduce many retirees' taxable income by up to $6,000 each year from 2025-28. The Senate-passed version lets every filer 65 or older subtract $6,000 ($12,000 for couples) from income regardless of whether they itemize. The House's One Big Beautiful Bill Act sets the figure at $4,000 per person, reported The Washington Post. Both chambers phase out the break in full for modified adjusted gross incomes up to $75,000 for singles and $150,000 for joint filers. It disappears entirely above $175,000 and $250,000, respectively. Don't Miss: Tired of Grid Failures and Charging Deserts? This Startup Has a Solar Fix and $25M+ in Sales — Now Raising at $3/Share Invest early in CancerVax's breakthrough tech aiming to disrupt a $231B market. Back a bold new approach to cancer treatment with high-growth potential. Middle-income retirees gain the most. A married couple earning $100,000 could save about $1,600 in federal tax under the Senate plan, analysts at Kiplinger estimate. Lower-income seniors who already owe little or no tax on Social Security would see smaller or no savings, while high-income retirees would phased out. "It targets the people who need the help more," said Howard Gleckman of the Urban-Brookings Tax Policy Center in a statement to the Washington Post. The Committee for a Responsible Federal Budget pegs the senior bonus, together with the bill's broader tax extensions, at about $30 billion a year and says it could push the Social Security trust fund's exhaustion date to late 2032 from early 2033 by trimming the taxes seniors pay on their benefits. The Tax Foundation calculates that the four-year deduction alone could cost $90 billion if the Senate number prevails, and as much as $250 billion if later made permanent. What Next: House and Senate negotiators must reconcile the $6,000 and $4,000 figures before a final vote expected before the July 4 recess. The Trump administration argues the deduction "slashes taxes on Social Security" without altering benefit formulas, delivering "historic tax relief" to seniors. Read Next: Maximize saving for your retirement and cut down on taxes: Schedule your free call with a financial advisor to start your financial journey – no cost, no obligation. Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here's how you can earn passive income with just $100. Image Via Eric Hartline-Imagn Images Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article Trump's 'Big, Beautiful Bill' Offers Seniors A $6,000 'Bonus' Tax Deduction: Here's How You Qualify For The Benefit originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Fox News
06-06-2025
- Business
- Fox News
Trump's tariff strategy could pay for his tax bill, but only if they stick, experts warn
The White House and congressional Republicans have said that President Donald Trump's sweeping tariffs would help pay for his mammoth tax bill, but tax experts say it depends on whether the president stays consistent. Senate Republicans are in the midst of hashing out their plan to tweak and reshape the president's "big, beautiful bill," which includes Trump's desire to extend and make permanent his first-term tax policies. However, the tax portion of the bill alone is expected to cost roughly $4 trillion. And when factoring in spending cuts and other revenue and economic drivers, the nonpartisan Congressional Budget Office found in a report earlier this week that, in all, the colossal legislative package would add $2.4 trillion to the deficit over the next decade. The CBO, which has come under recent scrutiny from congressional Republicans unhappy with the scoring of the president's "big, beautiful bill," also found that Trump's tariffs would reduce the deficit by $2.8 trillion over the same period. Joe Rosenberg, a senior fellow at the left-leaning Urban-Brookings Tax Policy Center, told Fox News Digital that the reconciliation package's potential impact on the debt is more concerning now than in 2017, due to higher debt levels and rising interest rates. When Republicans were putting together the president's original tax package, the national debt was roughly $20 trillion. Eight years later, that number has ballooned to over $36 trillion and counting. Rosenberg contended that if the CBO's report were taken as is, then Trump's tariffs would make the bill deficit neutral and then some. But the report assumed that the eye-popping sums that Trump's tariffs could generate were based on whether they were permanent. "I think what we've seen is that the tariff policy, again, seems to change day by day, hour by hour, minute by minute," he said. "And the administration is a little bit inconsistent about whether they view tariffs as purely a revenue source versus essentially a negotiating tool." The report also found that in exchange for trillions in deficit reduction, household wealth would drop, and the economy would shrink each year over the next decade. Tad Dehaven, a policy analyst at the Cato Institute, argued that this factor—along with Trump's tariffs being tied up in court over constitutional challenges and their shifting application—makes any projected benefits "extraordinarily unlikely." "Let's pretend that these tariffs are going to remain in place for 10 years at some level delineated today. That's a major tax increase, so whatever alleged benefit you're receiving from the tax cut in the reconciliation package, it's being offset by a tax increase," he said. "And a rather economically inefficient one." Mike Palicz, director of tax policy at the conservative Americans for Tax Reform, scoffed at the CBO's recent scoring, and lamented the agency as "a bunch of bean counters" that often miss the mark on key pieces of legislation, like the president's original Tax Cuts and Jobs Act. He argued that none of the outside noise should matter, telling Fox News Digital that "you cannot go out and explain to a normal person or business that their taxes aren't increasing next year if the Trump tax cuts are allowed to expire." "That's what the whole point of this exercise is, preventing the expiration of tax cuts, preventing the largest tax increase in American history," he said. "And no conservative, no Republican, should think that you address the deficit by raising taxes."
CNN
20-05-2025
- Business
- CNN
Who benefits most from the state and local tax deduction and why raising the cap is contentious
Source: CNN Increasing the $10,000 cap on the state and local tax deduction could benefit millions of tax filers. But a proposal to do just that has become a point of contention and a possible roadblock to House Republicans' passing 'one big, beautiful bill' that reflects President Donald Trump's agenda. That agenda includes making permanent essentially all of the individual income tax provisions from the 2017 Tax Cuts and Jobs Act, which are otherwise scheduled to expire this year. The SALT deduction, as it is known, enables federal income tax filers to deduct either their state and local income taxes or their state and local general sales taxes. In addition, they are also allowed to deduct their property taxes, assuming their income or sales taxes don't put them over the cap. The tax break, however, may only be taken by those who itemize deductions on their federal returns, which only a minority of filers do. Prior to 2017, there was no limit on the SALT deduction. But the TCJA imposed a $10,000 cap — which, when coupled with the expanded standard deduction under that tax law, meant the number of people who claimed the SALT deduction fell dramatically — from about one-quarter of filers in 2017, according to the Urban-Brookings Tax Policy Center, to less than 10% today. Going forward, it appears there will still be a cap, but it likely will be higher than $10,000. The question is just how much higher and for whom? The House Ways and Means and House Budget committees already approved a tax package that would permanently raise the cap to $30,000 for any taxpayer whose modified adjusted gross income is $400,000 or less if married filing jointly (and $200,000 or less for single filers). But anyone above those income thresholds would still be able to deduct at least $10,000, according to the Tax Foundation. The expectation, however, is that the cap will have to be higher than $30,000 to garner needed votes by a small group of House Republicans. Republicans introduced the cap as part of their 2017 tax cuts bill to help pay for the sweeping legislation. And they are hoping to use it again as a revenue raiser in this year's package. For example, the $30,000 cap proposal, which is expected to be amended before the House bill goes to the floor for a vote as early as Thursday, is estimated to raise $915.6 billion over 10 years relative to simply letting the cap expire as it is otherwise set to do if lawmakers don't act, according to estimates from the Joint Committee on Taxation. But GOP lawmakers from high-tax blue states, such as California and New York, are demanding greater relief for their constituents, who are disproportionately affected by the lower cap. This has sparked intraparty battles with their colleagues from lower-tax red states, whose residents don't benefit from the deduction nearly as much. It's hardly the first time SALT has been the subject of dispute in modern times, said tax historian Joe Thorndike. The SALT break has been on the books since 1913, when the federal income tax code was created. It also had a decade-long stint during the Civil War as well. But there have been efforts to limit the deduction over the past five decades. While originally the SALT deduction was created so that the federal government didn't encroach upon states' ability to collect revenue, SALT today is portrayed as a subsidy to high-tax states and as regressive in that it disproportionately benefits higher-income households, Thorndike noted. In 2020, the SALT deduction was claimed on just 8.6% of all federal tax returns, according to the Tax Policy Center. But the incidence of people claiming it was most concentrated in 13 states and the District of Columbia. The deduction was claimed on more than 20% of returns from Maryland and Washington, DC; and on 10% to 20% of returns filed by residents of California, Colorado, Connecticut, Georgia, Hawaii, Massachusetts, New Jersey, New York, Oregon, Utah, Virginia and Washington State. And those who have received the biggest break — both before and after the cap was imposed — are high-income filers, especially those in high-tax states and cities. In 2017, before the cap went into effect, for example, roughly two-thirds of the benefit went to those with incomes of $200,000 or more, according to the center. The average SALT deduction was about $13,000, but it topped $30,000 in eight counties, mostly in California and New York. While the vast majority of middle- and upper-income households received tax relief from TCJA regardless of where they lived, they would have received even more, had the cap not been instituted, said Howard Gleckman, a senior fellow at the TPC. For example, the tax cut for those in the top 20% would have been $2,500 larger, on average, had their state and local tax deductions not been limited, according to the center. Their average individual income tax cut was only about $6,200, instead of $8,700. The cap had an even greater impact on taxpayers in the top 1%, whose average tax cut was $40,100, instead of $71,000. But those in the bottom 80% would not have seen much of a change in the size of their tax cut had the cap not been put in place. See Full Web Article
