Social security tax reduction 2025

[psutiger]

Hi,

In 2024, our married AGI was $159,395 and our taxable income was $127, 095. Our total tax was $18,067.

Our combined social security income was $71, 618 and we withheld $6,785.

Assuming all 2025 income stays the same, how will the big, beautiful bill reduce our total tax bill this year? Is there any kind of table that helps show the math?

Any estimate is appreciated!

Thx, Mike

[mbpeddie]

Hello,

There is a new Senior Deduction under the One Big Beautiful Bill which allows up to a $6k deduction per taxpayer for taxpayers 65 or older by the end of 2025.

The deduction has a phase out triggered once Modified Adjusted Gross Income (MAGI) exceeds $75k for a single taxpayer or $150k for married filing jointly taxpayers. 

Assuming your figures are the same for 2024 and 2025.Here's how to figure out if your income will be under the phase out trigger:

• Adjusted Gross Income (AGI) = total gross income from all sources less certain adjustments on Schedule 1 of Form 1040 (resource: Definition of adjusted gross income)
• Add back: Foreign Earned Income Exclusion
• Add back: Excluded income from U.S. territories

If the total is under $75k/$150k (single/married filing jointly), then you'll get the full deduction. 

If you income exceeds the threshold for the phase out , then the senior deduction will not apply. However we do have a tax calculator which should help you estimate your tax liability: https://turbotax.intuit.com/tax-tools/calculators/taxcaster/  It is for 2024 as it has not been updated for 2025. Once the IRS updates all the changes from the OBBB, TurboTax will update the calculator for 2025

I hope this answers your question.

Mary, tax expert