AUTHOR BIO
TERMS OF USE
ABOUT US
Eggstack is an independent financial technology company located in Jacksonville, Florida. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future.
PRIVACY POLICY
The Big Beautiful Bill signed into law July 4, 2025 provides a new tax deduction for seniors age 65 and older. While it does not completely eliminate federal tax on Social Security, it significantly reduces it for most Americans.
The Big Beautiful Bill extra tax deduction is tied to your income. If your income exceeds a certain limit, your deduction is reduced. For now, this is a temporary measure. The new tax deduction is in effect from 2025 to 2028.
Did you know there is already an extra tax deduction for seniors age 65 and older? It has been in existence since 1948.
The existing extra tax deduction is permanent and is not tied to your income. The existing extra tax deduction is $2,000 for single filers and head of household, and $3,200 for married filers.
Extra tax deductions are added to the standard deduction. If you are 65 or older, your total deduction is the standard deduction plus the existing extra tax deduction plus the Big Beautiful Bill extra tax deduction.
The Big Beautiful Bill extra tax deduction is $6,000 for single filers and head of household, and $12,000 for married filers. The income limit is $75,000 for single filers and head of household, and $150,000 for married filers. If your income exceeds the income limit, your extra tax deduction is reduced by 6% of the amount your income exceeds the limit. That is a bit confusing, so we’ve included a spreadsheet to demonstrate how it works.
Before we dive into that, it’s important to note a couple of details. The income limits are MAGI, which is Modified Adjusted Gross Income. Regarding married filers, the extra deduction applies if both are age 65 or older. If only one meets that requirement, the deduction is cut in half.
This is Eggstack News...it wouldn’t be complete without a spreadsheet! Speaking of Eggstack, the program has been updated to include the tax benefits of the Big Beautiful Bill.
When income exceeds the limit, the extra deduction is reduced by 6% of the amount income exceeds the limit. Let’s look at an example. Sally is 66 years old and her income is $90,000. That’s $15,000 over the $75,000 limit for single filers. 6% of $15,000 is $900. Therefore, Sally’s extra deduction is $6,000 - $900 = $5,100.
As shown in the spreadsheets below, there comes a point where income is so far over the limit that the extra tax deduction is reduced to zero.
| INCOME | DEDUCTION |
|---|---|
| $25,000 | $6,000 |
| $50,000 | $6,000 |
| $75,000 | $6,000 |
| $90,000 | $5,100 |
| $125,000 | $3,000 |
| $150,000 | $1,500 |
| $175,000 | $0 |
| $200,000 | $0 |
| INCOME | DEDUCTION |
|---|---|
| $50,000 | $12,000 |
| $100,000 | $12,000 |
| $150,000 | $12,000 |
| $175,000 | $10,500 |
| $200,000 | $9,000 |
| $300,000 | $3,000 |
| $350,000 | $0 |
| $400,000 | $0 |
While it does not completely eliminate tax on Social Security, the Big Beautiful Bill does significantly reduce it. We’ll take any tax deduction we can get. Let’s hope the new deduction is made permanent before it expires in 2029.
For single filers and head of household, the Big Beautiful Bill extra tax deduction is reduced for income above $75,000, and is completely phased out for those who earn more than $175,000.
For married filers, the deduction is reduced for income above $150,000, and is completely phased out at $350,000.
Thank you for reading Eggstack News! We invite you to take a moment to explore the resources available here. There are hundreds of articles on retirement planning, personal finance, and success strategies.
Photo credit: Pixabay Eggstack News will never post an article influenced by an outside company or advertiser. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future. This article is for informational purposes only and is not financial advice or any other type of advice. Eggstack makes no representation to the validity, accuracy, completeness, or suitability of purpose of any information presented in this article.
