Guest Post from Bill in Arizona
The Senior Citizen tax relief in the “Big Beautiful Bill“, passed by the House, is an additional Standard Deduction increase for Seniors over 65 of $4,000 (singles) and $8,000 couples. The attached video and Tax Foundation link compares the “Big Beautiful Bill” Standard Deduction increase to eliminating Social Security Taxation altogether.
You may be interested to know that the “Big Beautiful Bill” is more favorable to middle and upper middle class Social Security recipients than Social Security Tax Elimination
Eliminating Social Security Taxation altogether would require a change to the Social Security Law which can’t be handled under the reconciliation process. In other words it would require 8 Democrats to support these Social Security Law changes in the Senate. This will never happen until we get some more reinforcements in the Senate anyways.
HOW WE GOT HERE
The Federal Government started taxing a portion (50%) of Social Security income at your top tax bracket in 1983. This was done to extend the life of the Social Security Trust Fund which was believed to be going broke at that time.
In 1993, Bill Clinton, “supercharged“ the concept. Clinton came up with the concept of Provisional/Combined income to determine what part of your Social Security would be taxed at a much higher rate of up to 85%.
The 85% change/increase was implemented even though there was no financial requirement to shore up Social Security in 1993. This was done as a means to merely enhance revenues to the “General Fund”. Clinton set up Income thresholds for Social Security income to determine Provisional/Combined income. These income amounts for Provisional income haven’t been adjusted for inflation since 1993 !!! Ironically, the changes were originally said to tax just “the rich”!!!
With the passage of time and increased inflation have resulted in the slow capture of over 50% of the Social Security population in the “Social Security Double Taxation net“. Like many Government schemes it happened slowly enough that the average taxpayer hardly noticed.
www.youtube.com/watch?v=LTEIOeQ3gtE
taxfoundation.org/blog/no-tax-on-social-security-senior-tax-deduction/