However, the benefit comes with precise limits and phase-outs to ensure that the relief targets middle- and lower-income retirees. For single filers, the deduction begins to decrease once modified adjusted gross income (MAGI) exceeds $75,000 and phases out entirely at $175,000. Married couples filing jointly see the phase-out start at $150,000 and disappear at $250,000. The approach is deliberately progressive, preventing higher-income retirees from disproportionately benefiting.
This nuance has sparked debate among experts and commentators. Many have interpreted the bill’s language as a promise of “no Social Security tax,” but the reality is subtler. The law does not eliminate taxation on benefits outright. Instead, the increased deduction reduces taxable income, effectively shielding more of those benefits from taxes. In practical terms, millions of retirees experience a lighter tax burden without changing the underlying law. Continue reading…
