Senate’s version of the Big Beautiful bill gives seniors a $6,000 tax deduction

The Senate’s draft of the One Big Beautiful bill will give a $6,000 tax deduction to Americans aged 65 and older who meet income and identity requirements. The House already passed its version on May 22, but their proposed deduction caps out at $4,000.

Both sides included the same idea — a senior tax break instead of eliminating taxes on Social Security benefits, which was part of President Donald Trump’s campaign promises. But that repeal didn’t make it into this bill because reconciliation rules don’t allow changes to Social Security.

This tax break runs from 2025 to 2028 and only applies to individuals and couples who have Social Security numbers. To get the full deduction under the Senate’s version, a person must earn no more than $75,000 in modified adjusted gross income. For couples, the cutoff is $150,000. If anyone earns above that line, their bonus starts shrinking. And it shrinks fast.

Senate phases out the deduction quicker than House

The Senate bill phases out the deduction at 6% for income above the limit. That means the benefit disappears faster compared to the House version, which reduces the deduction by only 4%. Alex Durante, a senior economist at the Tax Foundation, said that the difference matters for people near the income thresholds. “The faster phase-out means the full $6,000 benefit is lost more quickly,” he said.

The deduction is bigger in the Senate version, but only if someone qualifies for the full amount. Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, explained, “It really depends on where you are on the income distribution,” and said that middle-income seniors would likely benefit most from the Senate’s version of the bill. In his words, “It’s better because it helps the people who need the help more.”

The House version offers more flexibility. Seniors could claim the deduction whether they use the standard deduction or itemize their taxes. That gives a little extra breathing room, although Gleckman pointed out that not many seniors in that income bracket itemize anyway.

Everyone applying for this deduction — single or married — must have a valid Social Security number. That’s non-negotiable. It’s required for both individuals and spouses filing jointly. No exceptions for anyone missing that ID.

Social Security tax repeal dropped in favor of this

The idea of getting rid of taxes on Social Security was dropped because of cost. That change would’ve been too expensive. Right now, benefits are taxed based on a formula that uses combined income — your adjusted gross income, any nontaxable interest, plus half of your Social Security payments.

Under the current tax code, up to 85% of Social Security benefits are taxed for singles who earn more than $34,000 and couples who earn more than $44,000. For those earning between $25,000 and $34,000 as individuals or between $32,000 and $44,000 as couples, up to 50% of benefits are taxed. That system stays in place because reconciliation rules block any edits to it.

So instead of removing taxes from Social Security, lawmakers are tossing out this temporary bonus deduction. It’s limited. It’s focused on people making under $75,000 or $150,000, depending on their filing status. High-income earners are shut out completely. That was deliberate.

Both the House and Senate included the senior deduction in their versions, which means it’s almost guaranteed to appear in the final version of the bill. Once both sides negotiate and align on a unified draft, it’ll head to Trump’s desk for signature. The White House already called it a “historic tax break,” but it’s still temporary — and not a full fix.

Durante said he expects it to survive the process. “I think it’s pretty clear, since this was in both bills, that there’s going to be a version of a senior deduction.”

The bill stays locked in on middle-income seniors, and if the Senate’s $6,000 number holds up through negotiations, that could give a bigger deduction for those who qualify early — before the faster 6% phase-out chips it away.

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