Does the new tax bill really eliminate tax on Social Security?

Does the new tax bill really eliminate tax on Social Security?

The short answer: No.

Here’s what you need to know:

·         👉 Why it matters for seniors:Your taxable income and something called MAGI (Modified Adjusted Gross Income) affect more than just your taxes. They also impact how much you pay for Medicare premiums. For a more detailed explain of MAGI and other matters effecting your taxes and Medicare payments retirement check out Retirement Guidebook- From Planning Your Retirement to Enjoying It  available onAmazon

👉 The New Senior Deduction (2025–2028):

• $6,000 extra deduction for each person age 65+

• Up to $12,000 total for married couples (if both spouses are 65+)

Sounds great, right? But there’s a catch — income limits apply.

• Single: full $6,000 if income ≤ $75,000

• Married: full $12,000 if income ≤ $150,000

• Deduction is reduced 6% for income above those amounts

• Single at $175,000+ = no deduction

• Married at $250,000+ = no deduction

👉 How many seniors benefit?

• Full deduction: ~50–55% (12–14 million households, mostly single)

• Partial deduction: ~35–40% (9–10 million households, evenly split)

• No deduction: ~8–10% (2–2.5 million households, mostly married)

👉 Examples of the phase-out:

• Single at $85,000 → $5,400 deduction

• Single at $100,000 → $4,500 deduction

• Married at $170,000 → $10,800 deduction

• Married at $200,000 → $9,000 deduction

👉 What is MAGI?MAGI = AGI (Adjusted Gross Income) plus certain add-backs, such as:

• Tax-exempt interest (municipal bonds)

• Some excluded Social Security benefits

• Excluded savings bond interest (for education)

• Foreign income/housing exclusions

• Employer adoption assistance

• Income from U.S. territories/Puerto Rico

• Tuition & fees deduction

• IRA contribution deduction

• Passive rental losses (in some cases)

👉 Bottom line:This “Senior Deduction” helps some retirees, but not all. It won’t make Social Security completely tax-free.

📘 Want to truly understand retirement, taxes, and how to enjoy life after work?Check out Retirement Guidebook: From Planning Your Retirement to Enjoying It — available on Amazon.

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