President Donald Trump’s so-called “big, beautiful bill” just became law and has unleashed far-reaching impacts that both supporters and critics are scrambling to unpack.
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The 940-page legislative document touches on everything from immigration to healthcare, but it’s the modifications to the tax code that could be most noteworthy if you’re over a certain age.
Here’s why these new rules are a big deal for American seniors across the income spectrum, and why the next four years are a crucial window for you to adjust your tax plans accordingly.
Temporary tax deductions
Older Americans who rely on fixed incomes and are struggling with the cost-of-living crisis can expect some financial relief from this bill’s new tax credits and deductions.
Those aged 65 and above can now claim an additional tax deduction of $2,000 for single filers or $1,600 for each partner filing jointly. This deduction is on top of the standard deduction that is available to all taxpayers who don’t itemize their tax filings.
This seniors deduction is available even to those who itemize, unlike the standard deduction.
To qualify, individual taxpayers who earn up to $75,000 or couples who earn a combined income up to $150,000 can claim the full bonus deduction. The amount of deduction is gradually phased out at higher income levels and is fully phased out for anyone earning over $175,000 individually or $250,000 jointly.
Besides this bonus, many seniors could also benefit from other deductions included in the bill.
Auto loan borrowers, for instance, can deduct up to $10,000 in car loan interest payments if they meet certain eligibility criteria, and the amount of state and local tax (SALT) payments people can deduct from their federal taxes has been raised from $10,000 to $40,000.
Altogether, many seniors, especially those with auto loans or living in high-tax states, may see a lighter tax bill as a result of this new legislation.
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However, it is worth noting that several of these deductions have expiry dates. The SALT deduction is set to revert to $10,000 in 2030, while the auto loan interest deduction only applies to purchases in 2025, 2026, 2027 and 2028.
As for the bonus deduction for Americans ages 65 and over? That measure expires in the 2028 tax year.
In other words, many of these tax relief measures are attractive but limited and temporary. Seniors who can qualify may have a short window to take advantage of these temporary benefits.
Meanwhile, the One Big Beautiful Bill Act (OBBBA) makes big and permanent cuts to the social safety net, retirement benefits and medical assistance that could impact many seniors in negative ways over the long term.
Permanent cuts to the social safety net
The OBBBA includes funding cuts for some programs and tighter eligibility rules for others that could diminish the social safety net for many seniors.
Federal funding for the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, is set to be slashed and offloaded to state and local governments in October, 2027.
“To manage these new costs, states may be forced to restrict eligibility, limit benefits or withdraw from the program entirely, which would make it more difficult for eligible individuals to access food assistance,” wrote AARP chief advocacy and engagement officer Nancy LeaMond wrote in a June 29 letter to Senate leaders.
“Currently, many individuals are limited to three months of SNAP benefits every three years unless they are working for 20 hours per week or qualify for an exemption,” noted CNBC. “The new legislation will expand those requirements to individuals ages 55 through 64, parents of minor children ages 14 and up and veterans. It is unclear when those new rules go into effect.”
Over 11 million Americans over the age of 50 relied on SNAP as of 2023.
Meanwhile, the more than 9 million Medicaid recipients between the ages of 50 and 64 will face new work requirements to qualify for it as a result of this legislation, according to an AARP Public Policy Institute analysis.
“This big, beautiful bill — in terms of its impact on health care, on how physicians and hospitals are going to navigate the next few years — I think is the biggest immoral piece of health care legislation I’ve ever seen,” Arthur L. Caplan, PhD, a professor and founding head of the division of medical ethics at NYU Grossman School of Medicine, told Healio. “Just unethical, indefensible and tragic.”
These controversial measures could be why 53% of American adults strongly or somewhat oppose of Trump’s budget, according to a YouGov/Economist survey.
Nevertheless, since the bill has already passed, seniors have a short window of roughly four years to take advantage of temporary tax reliefs, credits and deductions to enhance their financial security independently.
Older Americans cannot afford to waste the next four years by neglecting these changes. Every dollar saved over this period could offset the long-term impacts of reduced federal support for medical and food benefits.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
