"While the OBBBA has significantly altered the retirement landscape, it is important to clarify that Social Security remains federally taxable. The law did not exempt these benefits directly; instead, it created the senior-specific deduction: $6,000 for individuals and $12,000 for married couples starting in 2025. This deduction is layered on top of the standard deduction and existing age-based benefits, effectively offsetting the taxable portion of Social Security for the vast majority of recipients."
"88% of seniors nationwide are expected to owe no federal income tax on their Social Security benefits, compared to just 64% before the law was passed. "This amounts to the largest tax break in history for America's seniors," according to the White House, which emphasized the importance of allowing retirees to "save more of their money" after decades of contributions. In 2026, the total deductions available to seniors are projected to reach $23,750 for individuals and $46,700 for qualifying couples."
The One Big Beautiful Bill Act (OBBBA) creates a senior-specific deduction of $6,000 for individuals and $12,000 for married couples starting in 2025. The deduction stacks with the standard deduction and age-based benefits, effectively offsetting the taxable portion of Social Security for the vast majority of recipients. As a result, 88% of seniors nationwide are expected to owe no federal income tax on Social Security benefits, up from 64% previously. The change is expected to eliminate federal income tax on Social Security benefits for 400,000 older New Mexicans. Total deductions available to seniors are projected at $23,750 for individuals and $46,700 for qualifying couples in 2026. The 2026 Cost-of-Living Adjustment raises Social Security and SSI benefits by 2.8 percent beginning in January 2026 for approximately 75 million Americans. The 2026 tax season began on Jan. 26, and the updated code applies to 2025 filings.
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