The Big Beautiful Bill and Social Security Tax - What You Need to Know

Are you collecting Social Security or planning on retiring? There’s a good chance you’ve heard that taxes can take away from your monthly check. 

With the introduction of the “Big Beautiful Bill”, there’s more confusion on how this can impact your Social Security. Let’s break down how Social Security and this new proposed legislation affect your benefits and taxation.

Social Security is one of those programs that all Americans will be part of at some point, but the rules can be confusing, and the taxed benefits can change. 

How Is Social Security Taxed?

Social Security is currently taxed based on your combined income, with up to 85% of your Social Security being taxed. 

The quick formula for combined income is your adjusted gross income, nontaxable interest, and half of your Social Security benefits. 

In practice, if you are single and have:

• $25,000 - $34,000 combined income: 50% of your benefits may be taxable
• $34,000+: 85% of your benefits may be taxable

If you are married, filing jointly: 

• $32,000 - $44,000 combined income: 50% of your benefits may be taxable
• $44,000+: 85% of your benefits may be taxable

What is the Big Beautiful Bill?

The Big Beautiful Bill is a piece of legislation that adjusts Social Security taxes and benefits to favor retirees.

For many, this bill could save thousands of dollars for retirees by increasing income thresholds or eliminating the tax. 

Key Income Tax Relief and Deductions:

• No tax on tips
• No tax on overtime
• No tax on car loan interest
• Deductions for Seniors

Please note that these deductions and tax relief elegibiliy are effective for 2025 through 2028. 

How does the Big Beautiful Bill affect Seniors (65+)?

Individuals who are 65 years and older may claim an additional $6,000 deduction or $12,000 for a married couple. 

The deduction does not apply to adjusted gross income over $75,000 or $150,000 for joint filers. 

If you think you may qualify for the $6,000 senior deduction, please reach out and schedule a meeting with Ovation today. 

Who Benefits from The Big Beautiful Bill?

Lower-income retirees and middle-income households just above the current taxable thresholds should benefit from the bill. 

Seniors with more modest pensions or fixed incomes might also benefit from the bill by minimizing excessive taxation. 

How Do I Prepare For the New Bill?

Even if you are not eligible for all deductions under the Big Beautiful Bill,  you should always:

1. Stay Informed: It is worth keeping updated to know changes in the tax system and if you qualify for new deductions.
2. Consult a tax professional: Help is available for your current tax situation, and professionals are waiting to walk you through your options
3. Plan ahead of time: Understand your Social Security taxation and save your money for potential tax changes.

If you think that you are being taxed too heavily on your Social Security and want to be informed on your options, reach out to our team of tax professionals for a free meeting.

Don't wait another day to get help. Contact Ovation Tax Group today and take the first step toward financial freedom.

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