Trump’s new spending bill has passed both the Senate and the House and was signed into law on July 4th. If you are a Senior Citizen you might be wondering how this law will affect your taxes.
A lot has changed, and the interesting thing is that many of the advantages that Trump gave the middle class in 2017 were set to expire this year. So tax rates would have gone up and deductions would have gone down, but now all that has changed. The majority of the original 2017 Trump changes have been made permanent.
Unfortunately, many of the new 2025 benefits are temporary (i.e., set to expire in 2028). Additionally, the new benefits are specifically written to phase out as income rises, so these can not be in any way construed to be “tax cuts for the rich” although the phase out range is generally pretty high.
No Tax for Social Security?
One of Trump’s campaign promises was to eliminate taxes on Social Security. And critics will say that he “lied” and didn’t do this. And “technically,” it would be true that taxes on Social Security weren’t totally eliminated. But it wouldn’t be from a lack of trying. Apparently, unlike some of the provisions that were set to expire, taxes on Social Security were less flexible.
So, as a “workaround,” the new tax bill includes two provisions to benefit Seniors (over 65). So, suppose you are 62 and collecting Social Security and have a large retirement income. In that case, you might not get much benefit from the new bill, but otherwise, an estimated 88% of Social Security recipients won’t owe taxes on their benefits.
Standard Deduction
If you remember back in 2017, Trump drastically raised the standard deduction. Before the Trump Tax cuts, the 2018 standard deduction amounts for single filers and married filing joint couples were $6,500 and $12,000, respectively. After the Trump Tax cuts, the standard deductions doubled to $13,000 (single filers) and $24,000 (married filing jointly). Since they were adjusted for inflation each year, in 2024, joint filers got $29,200.
The 2017 Trump Tax cuts were set to expire at the end of 2025; had this gone into effect, the standard deduction for single filers would have gone down to $8,300, and for joint filers it would have been $16,600. Without the reduction, the Trump numbers for 2025 were to be $30,000 (for joint filers) plus an additional $1,550 for each person over 65 (or blind).
But, as mentioned above, the new bill tacked on an additional $6,000 deduction per person over 65. So, for a retired couple over 65, the first $45,200 of income, Social Security, and IRA withdrawals result in zero income taxes. But these deductions could be reduced if the couple earns over $150,000 and is totally eliminated at the $250,000 level ($75,000 – $150,00 for singles).
Tax Brackets
In addition to increasing the standard deduction, Trump’s 2017 tax changes lowered the actual tax rate for the various tax brackets. These changes were also set to revert to the old (higher) rates. Fortunately, for Taxpayers the new bill retained the lower rates.
| Reverted Rate | Current Rate | Single | Joint |
| 39% | 37% | Above | Above |
| 35% | 35% | $626,350 | $751,600 |
| 33% | 32% | $250,525 | $501,050 |
| 28% | 24% | $197,300 | $394,600 |
| 25% | 22% | $103,350 | $206,700 |
| 15% | 12% | $48,475 | $96,950 |
| 10% | 10% | $11,925 | $23,850 |
So, after subtracting all the deductions, a single filer’s next $11,925 is taxable at the 10% rate, his next $48,475 is taxable at 12% but this would have risen to 15% if the Trump Tax cuts weren’t made permanent. And as you can see, several of the other tax rates would have increased as well.
Tax Table for Non-Seniors (Single Filer)
| Income Bracket | Taxes Due | Rate | Total Income |
| First $15,000 | Zero | Standard Deduction | Up to $15,000 |
| Next $11,925 | $1,192 | 10% Rate | Up to $26,925 |
From the above table, we can see that a single filer taking the standard deduction, earning $26,924 would owe $1,192 in Federal Income Taxes under the new plan. Of course, he would also owe FICA, and State and Local Taxes. The next level is the one that hits the average middle class the hardest, and raising it from 12% to 15% would be especially egregious.
Charitable Donations
With the 2017 tax cuts drastic increase in the standard deduction, most people no longer itemized. So, they didn’t get the extra benefit of charitable deductions. That has changed this year. In addition to taking the standard deduction, you can now add on charitable deductions up to $1,000 per person, as if you had itemized.
For Itemized Filers
For most people, the standard deduction will be better than itemizing, but if you have a big mortgage or live in a high tax state, there are some benefits for you in the new tax bill as well.
Previously, you could only deduct up to $10,000 of what you paid in State and Local Taxes, which could be much less than you actually paid in high tax states like New York or California. This new bill raises the limit to $40,000. Also, the $750,000 mortgage interest deduction was set to revert to a lower level but has been made permanent.
Car loan interest on new, U.S.-made, cars has also been made deductible for up to $10,000.
Other Taxes
The Estate Tax deduction was set to revert to $5 million from 2025’s $13.99 million. But instead, it was expanded to $15 million.
Child Tax Credit was increased from $2,000 to $2,200 per qualifying child starting in 2025 and made permanent and indexed for inflation.
Service workers can deduct up to $25,000 in reported TIP income ($50,000 per couple).
You can listen to Erin’s full explanation here:
PASSED: $6,000 Senior Tax Break & More — What’s in the One Big Beautiful Bill Sent to Trump
Retirement Nerds further explanation:
How the New Tax Law Will Actually Affect Your Tax Bill ($6,000 Senior Deductions, Roth, IRA)
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