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Senior Bonus Deduction Takes Effect After SSA Email Overstated Tax Cut

Eligible taxpayers over 65 can claim up to $6,000, subject to phased income limits, with experts warning of a widening Social Security funding gap.

Stock image/file photo: A Social Security Administration sign.
A Social Security Administration office in suburban Detroit.
Illustration: Gabriella Turrisi/Axios

Overview

  • The Social Security Administration sent an email claiming the new law eliminated federal taxes on most benefits, a statement later corrected to clarify that only a temporary deduction was introduced.
  • Eligible filers aged 65 and older can deduct up to $6,000 for singles and $12,000 for married couples, with full benefits capped at $75,000 and $150,000 in modified adjusted gross income.
  • The deduction phases out at a 6 percent rate and disappears entirely for single filers earning above $175,000 and joint filers above $250,000.
  • Retirees between ages 62 and 64 are excluded from the senior bonus and receive no additional tax break under the new law.
  • The share of beneficiaries exempt from taxes is expected to rise from 64% to 88% under the deduction, but analysts warn it will further strain Social Security’s finances.