The "Tax Relief Unleashed for Seniors by Trump Act" increases the income thresholds for excluding Social Security benefits from gross income, offering tax relief to seniors.
Nicole Malliotakis
Representative
NY-11
The "Tax Relief Unleashed for Seniors by Trump Act" aims to provide tax relief to seniors by increasing the income thresholds for excluding Social Security benefits from gross income. For single individuals, the threshold is raised from $25,000 to $50,000, and for married couples filing jointly, it increases from $32,000 to $64,000. These amounts will be adjusted for inflation beginning after 2026. The changes apply to taxable years starting after December 31, 2025.
Social Security Tax Break for Seniors Kicks Off in 2026: Income Thresholds Doubled
The "Tax Relief Unleashed for Seniors by Trump Act" is pretty straightforward: it aims to give many seniors a break on their taxes by raising the income limits for when Social Security benefits start getting taxed. This change is slated to take effect for taxable years beginning after December 31, 2025.
What's Changing with Social Security Taxes?
The bill, officially named in SEC. 1, doubles the income thresholds at which Social Security benefits become taxable. Here’s the breakdown:
- For single filers, the threshold jumps from $25,000 to $50,000 (Section 86(c)(1)(A) of the Internal Revenue Code).
- For those married filing jointly, it goes from $32,000 to $64,000 (Section 86(c)(1)(B)).
- The upper thresholds also increase: from $34,000 to $59,000 for single filers (Section 86(c)(2)(A)) and from $44,000 to $76,000 for joint filers (Section 86(c)(2)(B)).
Real-World Impact: More Money in Seniors' Pockets
Imagine a retired teacher, Sarah, who gets $30,000 a year in Social Security and has $22,000 in other income, like a small pension. Under the old rules, part of her Social Security would be taxed. With this new law, because her total income is under $50,000 + $22,000, none of her Social Security benefits will be subject to federal income tax. This means she keeps more of her money, plain and simple.
Or consider a retired couple, both construction workers, who jointly receive $40,000 in Social Security and have $26,000 in other income. Previously, a portion of their benefits was taxable. Now, because their combined income is less than $64,000 + $26,000, they'll also see a tax reduction on their Social Security benefits.
Keeping Up with Inflation
Starting December 31, 2026, these new income thresholds will be adjusted for inflation (SEC. 2). This is crucial because it means the tax relief won’t erode over time as the cost of living increases. The adjustment will be based on the cost-of-living, rounded to the nearest $100.
Bottom Line
This bill directly targets the tax burden on seniors receiving Social Security. By increasing the income thresholds, it ensures that more seniors with moderate incomes can keep more of their benefits. The added inflation adjustment is a smart move to maintain the value of this tax relief in the future.