DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing Big Beautiful Series: No Tax on Social Security?
Jul 18, 2025
Logan and Allie kick things off with a thrilling amusement park story before diving into the complex world of Social Security tax regulations. They bust myths surrounding Social Security income taxation and explain how it varies with total income. Recent adjustments, including age-specific benefits and increased deductions for seniors, take center stage. The hosts emphasize careful financial planning and the need for high-income earners to be aware of limitations, urging listeners to stay engaged and informed about these crucial changes.
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Social Security Tax Sliding Scale
- Social Security tax is applied on a sliding scale, not at fixed rates like 0%, 50%, or 85%.
- The taxable amount depends on income from sources outside Social Security.
New Senior Deduction Added
- The Big Beautiful Bill adds an additional deduction for seniors, reducing taxable income but not eliminating Social Security tax.
- This new deduction acts like a "coupon" lowering taxable Social Security but keeping the sliding scale intact.
Deduction Phase-Out Thresholds
- The extra senior deduction phases out at incomes above $75,000 for singles and $150,000 for married couples.
- Higher income seniors typically won't benefit from this deduction and will continue paying Social Security tax as before.