WASHINGTON, D.C. — The newly signed One Big Beautiful Bill Act, a sweeping overhaul of the U.S. tax code, also delivers key adjustments for millions of Social Security beneficiaries — including tax relief, benefit protections, and future system revisions.
But critics warn that the reform doesn’t go far enough — and could have unintended consequences.
Signed into law on July 3, 2025, the legislation introduces a $6,000 tax deduction for Americans over age 65 through 2028.
According to government estimates, this change will benefit nearly 88% of the 51.4 million people currently receiving Social Security payments.
What Changes for Retirees?
While the deduction offers meaningful relief, it begins to phase out at $75,000 in income for individuals and $150,000 for couples, limiting its impact on higher earners. In total, over 20 million retirees could see annual net increases in their benefits thanks to reduced tax burdens.
The bill also removes penalties for working while receiving benefits, which had previously discouraged many seniors from taking part-time jobs or reentering the workforce.
A Revised Cost-of-Living Formula
The legislation addresses long-standing complaints by revising the COLA (Cost-of-Living Adjustment) formula.
Seniors have long argued that previous inflation measures failed to reflect the true cost of aging — particularly for essentials like healthcare and housing.
The new formula is expected to better match retirees’ real-world expenses.
How Will It Be Funded?
To offset some of the tax cuts, the bill introduces a Financial Transactions Tax (FTT) — but only on trades exceeding $1 million. Republican lawmakers insist the measure won’t affect average investors.
Still, critics argue that the tax breaks for middle- and upper-income retirees come at the cost of Social Security’s long-term sustainability.
According to the nonpartisan Congressional Budget Office, the program’s trust fund could now face depletion as early as 2032, one year earlier than previously forecast.
Read Also: SNAP Reductions in Federal Bill Raise Alarms for Arkansas Food Relief Network
Not All Seniors See a Benefit
While wealthier seniors benefit from the tax deductions, low-income retirees — the most financially vulnerable — will see little to no change in their financial situation.
And despite campaign promises, the bill does not eliminate federal taxes on Social Security benefits, something former President Donald Trump had repeatedly pledged.
Supporters hail the Big Beautiful Bill as a bold move to modernize the nation’s tax and retirement systems. But detractors say it falls short of protecting the future of Social Security.
As the nation celebrated Independence Day, lawmakers and advocates on both sides of the aisle reignited the debate over retirement fairness and fiscal responsibility — with the program’s future now squarely back in the spotlight.
What Do You Think?
Will these changes help preserve Social Security — or put it at greater risk? Join the discussion now at Ridgecrestpact.org and let us know where you stand
