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Back on July 1, the White House issued a statement claiming that “88% of all seniors who receive Social Security — will pay NO TAX on their Social Security benefits” because of President Donald Trump’s new One Big Beautiful Bill Act (1).
However, the White House cited the U.S. Council of Economic Advisers, (2) a branch of the President’s office, as the source for this claim rather than an independent body.
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Experts at the Center for Budget and Policy Priorities (CBPP), meanwhile, have taken a closer look at the megabill’s impact on the Social Security program and found that the claims could be “false and exaggerated” (3).
While the debate rages on, understanding why experts disagree with the Trump administration on this issue could help you and your loved ones figure out if the new bill will help your finances or hurt you instead.
Targeted deductions
The White House’s calculations hinge on the megabill’s new and raised tax deductions for many seniors.
Starting this year, seniors aged 65 and above can claim a new deduction of up to $6,000 per person. For couples filing jointly, that could mean up to $12,000 if both spouses qualify.
These deductions reduce taxable income for older Americans. However, the White House acknowledged that about 64% of Social Security recipients already paid no federal tax on their benefits before the new law, thanks to existing deductions and exemptions.
Eligibility isn’t based on age alone — modified adjusted gross income (MAGI) also matters.
Only Individuals earning $75,000 or less can claim the full deduction. After this, it phases out and vanishes completely at $175,000. For joint filers, it starts phasing out at $150,000 and disappears entirely at $250,000.
Meanwhile, older Americans who are barely getting by likely won’t have the income necessary to take advantage of the deduction. If your total allowable deductions already exceed your income, an extra $6,000 doesn’t do much.
It’s also worth noting that the White House’s figures consider only beneficiaries aged 65 and over, but Social Security can be claimed as early as 62, meaning a portion of the recipient population is excluded from their estimate.
In total, fewer than 24% of all current Social Security recipients will see a reduction in taxable income directly due to the new law, according to the CBPP. This falls far short of Trump’s campaign promise to eliminate all taxes on Social Security.
Not only does this new deduction fall short of promises, but it also has second-order effects that could actually expose many seniors to lower benefits over the long term.
If your household income exceeds this $175,000 threshold for single filers and $250,000 for joint filers, you might want to consider employing tax-planning strategies to find ways to reduce your tax bill at the end of the year.
This is where white-glove advisorial services like Range can come in. High earners who don’t qualify for an OBBBA deduction can still get modern financial advice from experts through this all-in-one wealth management platform.
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Temporary deductions, faster trust fund depletion
The new senior deduction is temporary and only applies through 2028. Most older Americans who benefit from it will have just four years to take advantage of the savings.
At the same time, the cost of all the tax deductions and reductions in Trump’s megabill could reduce federal tax revenue from Social Security benefits by $30 billion annually, according to the CBPP.
“This is enough to accelerate the insolvency of the Social Security retirement fund and Medicare Hospital Insurance fund to 2032, a year sooner than the program’s trustees projected just last month,” the report stated.
And the CBPP isn’t alone in this assessment.
The Committee for a Responsible Budget (4) also estimates that the SSA’s retirement trust fund will go broke in 2032 without intervention. If the fund goes bankrupt, the report states that all retirees will face an across-the-board benefit cut of 24%. For couples retiring after the fund’s insolvency, that could mean a combined $18,400 reduction in benefits.
In other words, the new law likely offers short-term tax relief for some seniors, but at the expense of the long-term stability of Social Security and Medicare trust funds, which affects all beneficiaries.
The newly passed One Big Beautiful Bill Act also slashed Medicaid spending by roughly $1 trillion over the next decade. This could result in nearly 11.8 million Americans losing their health insurance by 2034, according to estimates from the Congressional Budget Office (5).
Taken together, this suggests that in the early 2030s, some older Americans could see their Social Security benefits crash while also losing their health insurance.
If you are retired or planning for retirement, it could be wise to consider making provisions for long-term care. Roughly 80% of older Americans, or nearly 34 million households, don’t have enough resources to deal with serious illnesses or the need for long-term care, according to the National Council on Aging (6).
Other ways to save for retirement
Chances are, Social Security paychecks won’t be enough to cover your expenses during retirement. And if you don’t meet the income requirements outlined in the OBBBA, you are required to pay taxes on these government checks.
But there are other ways to boost your retirement nest egg without paying an arm and a leg in taxes.
For instance, commercial real estate investments can help you lower your tax liability by deferring capital gains tax through a 1031 exchange, otherwise known as swapping one property for another “like-kind” property.
Plus, income generated from commercial properties is typically considered passive income — and might be eligible for passive activity losses to offset income. What’s more, you could access long-term capital gains rates on passive income generated from real estate, which might be lower than your marginal tax rate.
But buying commercial real estate isn’t cheap — and it comes with its fair share of headaches, like the hassles of property upkeep and tenant management.
Instead, accredited investors could invest in shares of grocery-anchored commercial properties through First National Realty Partners (FNRP) — without taking on the responsibilities of being a landlord.
FNRP leases its properties to national brands like Walmart, Kroger, CVS and Whole Foods, which provide essential goods to communities. The firm signs triple-net leases with its tenants, allowing investors with capital on hand to invest in these properties without worrying about tenant costs cutting into potential returns.
Getting started is easy. Simply answer a few simple questions, including how much you’d like to invest, to start browsing their full list of available properties.
Investing in commercial real estate can come with solid tax advantages, but the rules can be tricky. Another option would be to invest in residential real estate.
You can tap into this market by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, potentially earning quarterly dividends.
Whatever you choose, real estate can be a complex vehicle for building your wealth for retirement — see the 1031 exchange. To understand your choices better, it could be worthwhile talking to a financial advisor to see if it’s the right move for you.
You can find a vetted FINRA/SEC-registered advisor near you through Advisor.com. Here’s how it works: Answer a few questions about your financial situation and future goals, and Advisor.com will scan through their network of fiduciaries to match you with someone best suited for your needs.
Remember, a good financial advisor can turn into a lifelong financial commitment. That is why Advisor.com lets you set up a free introductory call with no obligation to hire to see whether your match is the perfect fit.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The White House (1), (2); Center on Budget and Policy Priorities (3); The Committee for a Responsible Budget (4); UC Berkeley Public Health (5); National Council on Aging (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.