@dmertz wrote:
The bill made no changes specific to how Social Security income is taxed, no changes to section 86 of the tax code. The bill simply slightly increased the standard deduction for those using the standard deduction and, for those who itemize deductions, increased the limit on the deduction for state and local income taxes through 2029 and added a deduction through 2028 for those age 65 and over if their income is below a certain threshold. These changes affect the taxability of all income, not just Social Security income, so suggestions that changes made by this bill specifically affect how Social Security income is taxed is mere handwaving.
I'm not sure that is entirely correct. The summary of the bill that I read indicated that the temporary $6000 senior deduction would be applied above the line (that is, it is available whether seniors itemize their deductions or not.)
For example, suppose you are married, over 65 and have $40,000 of deductions. The current standard deduction is about $34,000, so under current law you would use the itemized deductions. The temporary increase is applied whether you itemize or not, so instead of using a standard deduction of $34,000 + $12,000 =$46,000, you would get an itemized deduction of $40,000 + $12,000 =$52,000.
I agree the actual text is not clear on this (section 70103(a)(3).
One summary is here. https://govfacts.org/explainer/how-the-one-big-beautiful-bill-impacts-social-security/
The bottom line is that, because of how tax on social security is calculated, low income individuals already pay no tax on the social security. Middle income individuals will see the tax on their social security greatly reduced. The SSA estimates that the number of seniors whose social security is not taxed will increase from 69% to 88% (or 90%).
And, this is a temporary measure that expires December 31, 2028, unless it is extended by another act of congress in the future.
