The dust is settling on H.R. 1, “The One Big, Beautiful Bill Act,” and America’s seniors are beginning to understand the impact the Bill will have on their financial situation, at least for the next four years.  While OBBBA was massive in scope, about 60% of the detailed content covered an area of major concern for America’s seniors: Taxation.

Let’s look at the key tax-related amendments and how they benefit seniors.

Permanent Extension of the 2017 Tax Cuts and Jobs Act Rates

OBBBA permanently extended the lower individual tax rates set by the Tax Cuts and Jobs Act (TCJA) of 2017.  In addition to the tax bracket adjustments, the TCJA double standard deduction and existing senior deduction have been made permanent and indexed to account for future inflation.

If OBBBA had not been signed into law, the average taxpayer—seniors included–would have seen an across-the-board increase in individual tax rates, and the lower pre-TCJA standard deduction rules would have been reinstated. The net result would have arguably represented the largest tax increase in American history.

The “No Tax on Social Security” Promise

President Trump’s campaign pledge to end the taxation of Social Security benefits met with a roadblock in the Senate prohibiting changes to the structure of Social Security during a budget reconciliation process. Undaunted, the legislators pivoted to a $6,000 per qualified taxpayer “bonus” income tax deduction.  

As explained in the Bill’s text, the “bonus” deduction is temporary, applying only to tax years 2025 through 2028 and available to taxpayers age 65 and over. The additional deduction also has a phase-out provision, with incomes exceeding $75,000 for single filers and $150,000 for married couples facing a gradual reduction in the deduction amount.

To make it clearer, here’s a chart featured in a communication directly from The White House:

With these increased deductions in place, the Trump Administration estimates that 88% of tax filers age 65 and older will, in effect, be relieved of a federal tax burden on their Social Security benefits.  

And That’s Not All OBBBA Does for seniors

No Tax on Tips, No Tax on Overtime Pay

Specifically, OBBBA allows an above-the-line deduction (i.e., before calculating adjusted gross income) for qualified tips up to $25,000, phasing out for incomes over $150,000. Similarly, the Bill includes a deduction of up to $12,500 for single filers, $25,000 for joint filers, of qualified overtime compensation. The overtime deduction likewise phases out for higher incomes: $150,000 for single filers, $300,000 for joint filers.

These two provisions benefit a steadily growing portion of the over age 65 population  remaining in the workforce. Like the $6,000 “bonus” income deduction, these two provisions are temporary and will end after the 2028 tax year.

State and Local Tax Amendment

For roughly 80% of seniors who own their home and itemize their income tax deductions, the OBBBA amendment on state and local tax (SALT) is of particular interest. This amendment raises the limit to $40,000 for the 2025 tax year 2025-2029, then increases it by 1% each year through tax year 2029. The previous $10,000 limit returns in 2030. The higher SALT caps begin to phase out for income levels exceeding $500,000.

Interest Paid on Car Loans

Interest on loans to purchase a personal-use passenger vehicle will be deductible during the 2025-2028 tax years, up to a maximum of $10,000. This deduction phases out at higher income levels ($100,000 for single filers, $200,000 for joint filers).

Tax-Advantaged Accounts for Children

Many grandparents will enjoy the ability to establish a “Trump Account,” a tax-preferred savings vehicle designed to build a solid financial future for young Americans. Beginning July 4, 2026, any child under the age of 18 will be eligible for a one-time $1,000 contribution from the federal government, and annual contributions of up to $5,000  annually will enable the account to grow through investments.

Charitable Contributions Return for Non-Itemizers

Seniors are traditionally the most generous when it comes to philanthropy. Beginning in 2026, taxpayers claiming the standard deduction on their income tax return will be able to take deductions for charitable contributions, up to $1,000 for single filers and $2,000 for joint filers.

OBBBA and Social Security’s Nagging Insolvency Problem

Irrespective of the much-needed OBBBA tax relief, the long-term financial picture for Social Security remains in peril. In fact, the Committee for a Responsible Federal Budget (CRFB) projects a $30 billion decrease in revenue from benefit taxation, resulting in the Old-Age and Survivors (OASI) trust fund depletion advancing from 2033 to 2032 and the projected benefit cut increasing from 23% to 24%.

So, despite temporary tax relief for seniors, the Social Security insolvency problem is not going away. With less than seven years of runway, the pressure on Congress to craft a workable solution to the program’s long-term financing problem will intensify. As everyone knows, the closer we are to the endpoint, the more severe the consequences will be.  Social Security’s financial problems are not self-correcting.

AMAC has been focused on this problem for many years and has developed a 14-point plan to ward off insolvency and preserve Social Security for generations to come. Our plan, the AMAC Social Security Guarantee, is a heavily researched and well-balanced plan that looks at the entire Social Security structure and recommends a series of adjustments and formula changes that would realign Social Security with the 21st-century economy. We’re in the fight to modernize and preserve Social Security for current and future generations!

(Editorial note: This article appeared in the October/November issue of the AMAC Magazine (Vol 19, Issue 5)