The massive tax bill that's on its way to the House floor includes a $4,000 deduction for seniors aged 65 or older — an alternative to the Trump proposal to eliminate the income tax on Social Security benefits.
"The original Trump proposal would have eliminated over $1 Trillion in revenue from the Social Security and Medicare Trust Funds, advancing the depletion date of the Social Security Trust Funds by one year and the Medicare Trust Funds by 6 years," Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, told ThinkAdvisor Thursday in an email.
The new provision applies to eligible filers with a modified adjusted gross income that does not exceed $75,000 for single filers or $150,000 for married couples filing jointly. The senior deduction is available to both itemizers and non-itemizers, and is allowed for tax years 2025 through 2028.
"Although the overall bill will be a disaster for seniors, especially the massive increase in the deficit and the slashing of Medicaid and SNAP benefits, we are pleased that Ways and Means Republicans have provided an alternative to the Trump proposal to eliminate the income tax on Social Security benefits," Richtman said.
The Ways and Means proposal of an extra $4,000 standard deduction for seniors, however, "doesn’t counter the harm to seniors' programs that will result from the rest of the bill, which will dramatically increase the deficit, and slash programs important to older Americans, all to pay for a massive tax cut that primarily goes to the wealthy," Richtman continued.
He noted that the enhanced standard tax deduction for seniors "will only offset the total impact of Social Security benefit taxes for about 3 million people."
Nancy Altman, president of Social Security Works, added in another email that the tax bill includes no Social Security provisions "because the reconciliation rules exclude Social Security. This is because Social Security doesn't add a penny to the deficit."
However, Altman added: "It is striking that provisions in the bill that focus on seniors and other working and middle-class Americans disappear after four years while the tax handouts to billionaires are permanent."
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