How Trump's Tax Bill Could Affect Social Security, Seniors

WASHINGTON, DC — House Republicans narrowly passed what former President Donald Trump has branded his "big beautiful" tax and immigration package on Thursday, advancing a major piece of his 2024 agenda. But one lingering question remains: what will it mean for Social Security?

Officially titled the "One Big Beautiful Bill Act," the sweeping legislation bundles a range of Trump Administration priorities — tax cuts, new border security funding, and changes to public assistance programs — into a single package. It now heads to the Senate, where lawmakers hope to finalize their version by the Fourth of July holiday.

At its core, the bill aims to extend roughly $4.5 trillion in tax cuts first passed under Trump in 2017. To help offset the revenue loss, Republicans proposed tightening eligibility for Medicaid and food stamps by adding work requirements for many recipients. The measure also guts key climate provisions from Biden’s Inflation Reduction Act, rolling back green energy tax credits.

Several of Trump’s campaign pledges made it into the House version, including eliminating taxes on tips, overtime pay, and car loan interest.

But what about Social Security — and Trump’s long-standing promise to end federal taxes on those benefits?

A "no tax on social security" provision did not make it into the 1,116-page bill. According to The Hill, Social Security programs cannot be altered through a budget reconciliation process.

But there is perhaps a upside for seniors, as the bill does include tax relief for older citizens. The bill would allow for an extra $4,000 deduction for tax filers older than 65.

To qualify, seniors must have a modified adjusted gross income under $75,000 and married couples under $150,000.

Will The Deduction Actually Save Seniors Money?

An analyst told ABC News it's important to note that this doesn't mean seniors will get a $4,000 check for that amount. And middle-class single seniors will most likely save about $880 a year, while married middle-class filers could save around $1,760.

“This one is a deduction, not a tax credit,” Cathy Bergstrom with the Shepherd Center of Greensboro, told ABC. “It’s a deduction from your otherwise taxable income.”

The tax breaks for tips, overtime and car loan interest expire at the end of 2028. That's also the case for the $4,000 increase in the standard deduction for seniors.

Critics of the bill say it comes at the expense of social safety net programs like Medicaid and food stamps (SNAP).

The bill imposes "new community engagement requirements" of at least 80 hours per month of work, education or community service for capable adults who do not have dependents. The new requirement begins on Dec. 31, 2026.

Republicans hope to save $700 billion by reducing spending in the Medicaid program, according to the Congressional Budget Office.

For state and local taxes, only higher earners would see a tax break.

The bill increases the “SALT” cap to $40,000 for incomes up to $500,000, with the cap phasing downward for those with higher incomes. Also, the cap and income threshold will increase 1% annually over 10 years.

In “the dark of night they want to pass this GOP tax scam,” said Rep. Pete Aguilar, D-Calif.

Other Democrats called it a “big, bad bill” or a “big, broken promise.”