Social Security letter on taxes sends confusing message, some experts say

The Social Security Administration is telling people that federal income taxes on most recipients’ benefits will be eliminated under a recently passed tax and spending bill.

But while more seniors will get a tax break, the message itself is confusing and could mislead Social Security recipients about the new policy, some tax and policy experts said.

Congress on Thursday passed the legislative package that President Donald Trump dubbed the One Big Beautiful Bill, including a temporary $6,000 deduction for seniors who earn as much $75,000 a year, or $12,000 for joint filers earning as much as $150,000.

The Social Security Administration sent an email soon after saying that the landmark legislation “delivers long-awaited tax relief to millions of older Americans” and includes “a provision that eliminates federal income taxes on Social Security benefits for most beneficiaries, providing relief to individuals and couples.” But policy experts say the bill does not ax federal income taxes on Social Security benefits — though it does reduce some people’s taxes through the new deduction, which is set to expire after 2028.

“There is no provision in the budget bill that directly ‘eliminates’ or even reduces taxes on Social Security benefits,” said Howard Gleckman, senior fellow at the nonpartisan Tax Policy Center.

Before this week’s passage of the bill, about 64 percent of senior beneficiaries had exemptions and deductions that exceeded their taxable Social Security income, according to a White House Council of Economic Advisors analysis. That figure rises to about 88 percent under the new measure, the analysis said.

The bill “increases the standard deduction for seniors, which, as a result reduces the number of seniors who will pay taxes on their Social Security benefits,” said Marc Goldwein, senior vice president of the nonpartisan Committee for a Responsible Federal Budget.

More than 74 million U.S. residents in May received Social Security, Supplemental Security Income or both, according to federal data. The new deduction for seniors gradually decreases for income levels above $75,000 until it disappears for individuals earning more than $175,000. People below a certain combined income — currently $25,000 for individuals and $32,000 for joint filers — don’t pay federal income taxes on their Social Security benefits; combined income includes one-half of annual Social Security benefits along with other income sources.

“It’s only higher-income beneficiaries who pay the tax in the first place,” said Kathleen Romig, a former Social Security Administration official who now works for the left-leaning Center on Budget and Policy Priorities. “That’s who is being affected by this higher deduction, but it’s indirect.”

The median personal income for people 65 and over was about $32,000 in 2023, the most recent year for which figures are available, according to the Census Bureau.

The new deduction wouldn’t help single Social Security beneficiaries younger than age 65, policy experts said. That includes many disability beneficiaries, people who retired before 65, and those whose spouse or parent died, Romig said. “Lots of them are under age 65, so they are not affected by this at all,” she said.

The Social Security Administration did not immediately respond to a request for comment Friday. The White House referred questions to the agency. It previously said that the bill “delivers historic tax relief to seniors, with a new tax deduction that, combined with other deductions, ensures the average Social Security beneficiary will pay zero taxes on Social Security.”

Romig, formerly a senior adviser in the Social Security Administration who worked for both Republican and Democratic presidents, described this week’s email from the agency as overly political in praising specific legislation — and referencing a Trump campaign promise to protect Social Security — while past communications were mostly about the logistics of filing and verifying information. An atypical email from a legitimate source could make recipients more likely to fall for scammers in the future, she said.

“Anything unexpected or unusual like this is raising alarm bells from [recipients of the email], as it probably should,” Romig said. “Next time, if they get an email from a fraudster purporting to be SSA, they’re going to be like, ‘Well, last time the thing I thought was scammy was actually legit.’”