Good afternoon everyone!
From everyone at WTA, we hope you had an excellent 4th of July holiday – it should be filled with fireworks and fun and not with family tax debates! While all of us were enjoying the grill and a cold beverage or two, Congress decided to celebrate by passing the One Big Beautiful Bill Act into law. Nothing says freedom like a 600-page omnibus bill, right?
Like all of the modern budget reconciliations that Congress passes, the OBBBA tries to do everything – fund the government, back the current administration’s agenda, ratify Department of Government Efficiency cuts, and tweak tax law. But what we’ve been asked about the most (by far!) are the provisions that affect tax benefits for retirees, particularly the tax credits for Social Security.
The OBBBA did not eliminate taxes on Social Security benefits. What it did is provide an additional deduction for filers making below a certain level of income. Here is the table:
Filing status Deduction Phase-out Begins Phase-Out Ends
Single $6,000 $75,000 $175,000
Joint $12,000 $150,000 $250,000
So if you’re married filing jointly and you have below $150k in income you get an additional $12,000 deduction, a smaller deduction if your income is between $150k – $250k, and nothing at all if your income is above $250k a year. This deduction is in addition to all your other deductions, whether you itemize or not.1
Before the bill passed, the White House proclaimed that 88% of seniors would benefit from the OBBBA. What they meant is that with the additional deductions provided, 88% of seniors would have more in deductions than they received in taxable Social Security benefits.2 That is not the same as eliminating the tax. The Social Security income is still counted, and you’re still taxed – just with a larger deduction to soften the blow. (Unless you happen to have too much income – in that case, you don’t benefit from the OBBBA at all!)
This kind of legislative sleight-of-hand is a part of what makes following political events closely so frustrating, right? But that’s why you can’t entrust lowering your taxes to Congress (they have to pay the interest on the $37 Trillion dollar debt, after all),3 and it’s why we look so hard for tax-reduction strategies on your behalf. There are lots of ways we’ve found to reduce taxes in retirement, such as:
- Roth Conversions: Shift taxable money to tax-free accounts while you’re still working or are in a lower tax bracket.
- Charitable giving from RMDs: Give to causes you care about and cut cut your taxable income at the same time.
- Installment Sales or Trusts: Selling property? Stretch out the gains and defer those taxes with smart legal planning.
And don’t let us get started on what we can do for business owners! The OBBBA might be new, but our tax team has been lowering tax liabilities for years – no 600-page bills required. If you’re concerned about what effect the One Big Beautiful Bill Act might have on your retirement, give us a call. We’ll cut through the media spin, read the fine print, and help you find real ways to keep the most of your money.
Like Scott always says, if you listen to us, we’ll change your financial world!
Sincerely,
Pate Hasty
The WTA Investment Committee
P.S. I’d like to thank all of your for the feedback you’ve provided us on these commentaries! It means a lot to us. Scott Wright is out of the office today, but he will return next week.
1 Durante, Alex. “How Does the Additional Senior Deduction Compare to No Tax on Social Security?” The Tax Foundation, 7/4/2025. Web. https://taxfoundation.org/blog/no-tax-on-social-security-senior-tax-deduction/
2 “The One Big Beautiful Bill Delivers On President Trump’s Promise Of No Tax On Social Security” The White House Council of Economic Advisors, June 2025. Web. https://www.whitehouse.gov/wp-content/uploads/2025/03/The-One-Big-Beautiful-Bill-Delivers-On-President-Trumps-Promise-Of-No-Tax-On-Social-Security.pdf
3 “US Debt Clock” US Debt Clock.Org. Web, accessed 7/9/2025. https://www.usdebtclock.org/
