Aug 10, 2025
Back on July 1, the White House issued a statement claiming that “88% of all seniors who receive Social Security — will pay NO TAX on their Social Security benefits” because of President Donald Trump’s new “One Big Beautiful Bill.”
However, the White House cited the U.S. Council of Economic Advisers, a branch of the President’s office, as the source for this claim.
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Independent experts at the Center for Budget and Policy Priorities (CBPP), meanwhile, have taken a closer look at the megabill’s actual impact on the Social Security program and found that the claims could be “false and exaggerated.”
While the debate rages on, understanding why experts disagree with the Trump administration on this issue could help you and your loved ones figure out if the new bill actually helps your finances over the long-term or if it’ll hurt you instead.
Targeted deductions
The White House’s calculations hinge on the megabill’s new and raised tax deductions for many seniors.
Starting this year, seniors aged 65 and above can claim a new deduction of up to $6,000 per person. For couples filing jointly, that could mean up to $12,000 if both spouses qualify.
These deductions reduce taxable income for older Americans. However, even the White House acknowledges that about 64% of Social Security recipients already paid no federal tax on their benefits before the new law, thanks to existing deductions and exemptions.
Eligibility isn’t based on age alone — modified adjusted gross income (MAGI) also matters. Individuals earning $75,000 or less can claim the full deduction. It phases out above that and vanishes at $175,000. For joint filers, it starts phasing out at $150,000 and disappears entirely at $250,000.
It’s also worth noting that the White House’s figures consider only beneficiaries aged 65 and over, but Social Security can be claimed as early as 62, meaning a portion of the recipient population is excluded from their estimate.
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In total, fewer than 24% of all current Social Security recipients will see a reduction in taxable income directly due to the new law. According to the CBPP, this falls far short of Trump’s campaign promise to eliminate all taxes on Social Security.
Not only does this new deduction fall short of promises, it also has second-order effects that could actually expose many seniors to lower benefits over the long-term.
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Temporary deductions, faster trust fund depletion
The new senior deduction is temporary and only applies through 2028. Most older Americans who benefit from it will have just four years to take advantage of the savings.
At the same time, the cost of all the tax deductions and reductions in Trump’s megabill could reduce federal tax revenue from Social Security benefits by $30 billion annually, according to the CBPP.
“This is enough to accelerate the insolvency of the Social Security retirement fund and Medicare Hospital Insurance fund to 2032, a year sooner than the program’s trustees projected just last month,” the report stated.
In other words, the new law offers short-term tax relief for some seniors, but at the expense of the long-term stability of Social Security and Medicare trust funds, which affects all beneficiaries.
If you are retired or planning for retirement, it may be wise to consider a broader outlook. If you’re eligible, you could use the new deduction to boost your personal savings, and talk to a financial advisor about preparing for the possibility of smaller Social Security checks in the future.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
