Social Security Tax and the Big Big Beautiful Bill - What Does This Mean for You?

If you're planning on retirement or collecting Social Security,  there’s a good chance you’ve thought about how taxes can impact your monthly check. 

The One Big Beautiful Bill Act of 2025, signed into law on July 4,  may impact you and your Social Security. Let’s break down how Social Security and this new proposed legislation affect your benefits and taxation.

Social Security is one of those programs that all Americans will be part of at some point, so let's walk through how the One Big Beautiful Bill Act of 2025 will impact your potential deductions. 

What is the Big Beautiful Bill?

The One Big Beautiful Bill Act of 2025 is a piece of legislation that adjusts Social Security taxes and benefits to favor retirees.

Thousands of dollars for retirees can be deducted thanks to the provisions of this new bill. 

Key Provisions going into effect in 2025:

• No tax on tips
• No tax on overtime
• No tax on car loan interest
• Deductions for Seniors

Who Benefits from The Big Beautiful Bill?

Lower-income and middle-income households, who work on tips and overtime, will benefit from this change in tax law and added deductions. 

Seniors with more modest pensions or fixed incomes might also benefit from the bill by minimizing excessive taxation through the new senior deductions.  

How Is Social Security Taxed?

Social Security is currently taxed based on your combined income, with up to 85% of your Social Security being taxed. 

Combined Income =  adjusted gross income + nontaxable interest + half of your Social Security benefits

As a single individual filing:

• $25,000 - $34,000 combined income means 50% of your benefits may be taxable
• $34,000+ means 85% of your benefits may be taxable
• $6,000 senior deduction

Under Joint filing: 

• $32,000 - $44,000 combined income means 50% of your benefits may be taxable
• $44,000+ means 85% of your benefits may be taxable
• $12,000 total deduction for a married couple

The Big Beautiful Bill and Social Security Deduction

Under the Big Beautiful Bill, senior deductions per individual are $6,000, while $12,000 is deductible for married couples. 

This deduction is phased out with a gross income over $75,000 or $150,000 for joint filers. 

How Do I Prepare For the New Bill?

1. Consult a tax professional: Help is available for your current tax situation, and professionals are waiting to walk you through your options and possible deductions
2. Stay Informed: The bill has not passed, but it is worth keeping updated to know changes in the tax system
3. Plan ahead of time: Understand your Social Security taxation and save your money for potential tax changes.

If you think that you qualify for a senior deduction and want to be informed on your options, reach out to our team of tax professionals for a free meeting. 

Ready to maximize your deductions? Schedule a free consultation