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Money Explainers
  • 9/7/2025
Get the real story behind the headlines on Social Security benefits.
Understand what Trump's "big, beautiful bill" truly means for your taxes.
Learn how the temporary tax deduction impacts older Americans.
#SeniorBenefits #TaxReformReality #SocialSecurityFacts

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Transcripción
00:00Do Social Security taxes disappear with Trump's reform?
00:04Despite claims from the White House and the Social Security Administration that the reform
00:09introduced by President Donald, Trump's Big Beautiful bill will lead to the elimination
00:15of federal income taxes on Social Security benefits for most beneficiaries experts widely
00:20agree that these taxes do not disappear.
00:24The White House stated that under the one big beautiful bill, 88% of all seniors receiving
00:30Social Security would pay nitrogen monoxide tax on their benefits, calling it the largest
00:37tax break in history for America's seniors.
00:40The SSA similarly claimed the legislation eliminates federal income taxes on Social Security benefits
00:48for most beneficiaries and that nearly 90% of beneficiaries would no longer pay these
00:53taxes.
00:55These figures were based on an analysis from the Council of Economic Advisers.
00:59However, policy experts describe these claims as misleading and not accurate.
01:05The legislation does not eliminate taxes on Social Security benefits.
01:10One key reason it was impossible to eliminate these taxes under the bill was a congressional
01:14restriction known as the Byrd Rule, which limits what can be included in a budget reconciliation
01:20bill.
01:21What the reform actually does?
01:23A temporary tax deduction.
01:26Instead of eliminating taxes, the reform introduces a new temporary additional tax deduction
01:32for beneficiaries.
01:34While the legislative tax referred to it as a bonus, it's technically a deduction that
01:38reduces the amount of income subject to taxes, not a direct payment or bonus check like
01:44those issued during COVID.
01:46Here are the key details of this temporary deduction.
01:49Amount eligible individuals aged 65 and older can claim a deduction of up to $6,000.
01:57And married couples where both are 65 or older can claim up to $12,000.
02:04Eligibility and income thresholds.
02:06It's only available for taxpayers 65 years or older.
02:11Beneficiaries under 65 are not eligible.
02:14The full deduction is available for single filers with a modified adjusted gross income of up to
02:20$75,000 for married couples filing jointly.
02:24The full deduction is available for a MAGI up to $150,000 phase out.
02:31The deduction gradually phases out for incomes above these thresholds.
02:35It is fully phased out for individuals making $175,000 and for couples making $250,000.
02:43Application.
02:44This deduction applies to a senior's total income.
02:48Not just social security benefits, it's an above-line deduction, meaning it's subtracted
02:54from gross income to calculate adjusted gross income, which can indirectly reduce tax
03:00liability on social security benefits.
03:03Crucially, this deduction is only set for tax years 2025 through 2028.
03:11This means that it will expire at the end of 2028.
03:15And beginning January 1, 2029, this specific tax relief will no longer be available.
03:21Who benefits and who doesn't?
03:23While some seniors may receive tax relief, the impact of this deduction is not universal.
03:29Middle-income seniors are projected to benefit the most.
03:33Specifically, those with incomes between $50,000 and $200,000 are estimated to see the most benefit.
03:41Low-income seniors who already pay no federal income tax on their benefits because their
03:47income is too low will not benefit from this deduction.
03:50As one expert noted, boosting the amount that you get to write off when you already get to
03:56write off everything does not help you at all.
03:59Those under 65 years old are ineligible.
04:02Individuals with incomes too high to qualify for the deduction or who are beyond the phase-out range will also not benefit.
04:10The Urban Brookings Tax Policy Center estimates that fewer than half of older adults will benefit from this senior deduction.
04:18Even for those who do benefit, the deduction aims to reduce rather than eliminate their taxes on benefits.
04:25They will simply see fewer taxes.
04:29Impact on Social Security funding experts.
04:32Also caution that despite the administration's claims of protecting Social Security, these provisions
04:38could actually weaken the program's financial state by reducing the tax revenue it receives.
04:43The additional senior deduction is estimated to reduce the taxation of Social Security.
04:49Benefits by approximately $30 billion per year.
04:54This could accelerate the projected insolvency date for the Social Security trust fund dedicated
04:59to retirement benefits to late 2032.
05:03Moving it up from the previously projected date of early 2033, the Penn Wharton budget model estimates
05:09that eliminating income taxes on Social Security benefits would lower federal revenue.
05:15By $1.5 trillion over 10 years and increase federal debt by 7% by 2054.
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