Social security

There are currently two bills before congress designed to lower the taxes on seniors. The first is called The Bonus Tax Relief for Seniors Act. First off only 40% of seniors pay tax under current law. Here is an example of how this law will affect taxes. John and Mary Smith have $2,500 per month in pension and collect $3,500 per month in social security benefits. Thus, their annual income is $30,000 in pension and $42,000 in SS. They take one half of their SS which is $21,000 and add that to their pension which is $30,000 for a total of $51,000. From that they subtract $32,000 which leaves $19,000 and half of that or $9,500 is the part of their SS which is taxed. They add that to their $30,000 pension for a total of $39,500. From this they subtract their standard deduction which for two people over age 65 is $34,000 for tax year 2025 leaving $5,500 taxable income. The Bonus Relief Act will increase the extra deduction for seniors from $2,000 to $5,000 meaning the deduction for this example will be $40,000 instead of $34,000 meaning they would pay no taxes as $39,500 minus $40,000 is zero. The second bill is called the Tax Relief for Seniors Unleashed Act doubles the exclusion from $32,000 to $64,000. For John and Mary Smith this means They take their SS benefit of $42,000 cut it in half to $21,000 then add their pension money of $30,000 for a total of $51,000 and subtract the $64,000 which means none of their SS is taxable so this leaves only their pension income of $30,000. From that they subtract the standard deduction of $34,000 leaving zero taxable income as $30,000 minus $34,000 is zero. Using a higher pension income of $50,000 the taxable income on the first bill would be $19,500 and under the second bill the tax income would be $19,000. With no change the taxable income would be $30,000 so this helps more as income rises.