The One big beautiful Bill Act (OBBBA) was signed into law by President Trump July 4, 2025. Here are some highlights that may impact your insurance and retirement planning:
What’s in the Bill?
Social Security Changes
The OBBBA doesn’t eliminate taxes on Social Security benefits but offers a temporary “senior bonus” tax deduction to ease the tax burden for many seniors:
What This Means for You
Contact us if you have any specific questions about the bill or how it may impact your insurance and retirement planning.
What’s in the Bill?
- Taxes: Keeps 2017 tax cuts, raises the standard deduction ($15,750 for singles, $31,500 for couples in 2025), and increases the state/local tax deduction cap to $40,000 (for incomes under $500,000). Adds temporary deductions for tips, overtime pay, and auto loan interest (U.S.-made cars), expiring in 2028.
- Child Tax Credit: Boosts it to $2,200 per child, requiring one parent to have a Social Security number.
- Spending: Adds $150 billion for defense and $170 billion for border security (including a border wall).
- Cuts: Reduces Medicaid (by up to $1 trillion) and food stamps, with new work requirements.
- Other: Creates tax-deferred “Trump Accounts” for kids born 2024–2028 with a $1,000 federal deposit and raises the debt ceiling by $5 trillion.
Social Security Changes
The OBBBA doesn’t eliminate taxes on Social Security benefits but offers a temporary “senior bonus” tax deduction to ease the tax burden for many seniors:
- Senior Bonus Deduction:
- What It Is: Seniors 65+ can deduct up to $6,000 (singles) or $12,000 (couples) from their taxable income, on top of the standard deduction. Available 2025–2028.
- Who Qualifies: Seniors with incomes up to $75,000 (singles) or $150,000 (couples). It phases out at $175,000 (singles) or $250,000 (couples).
- Impact: This could eliminate taxes on Social Security benefits for about 88% of recipients (51.4 million people). For example, a single senior with $30,000 in Social Security and $20,000 in other income could use the $15,750 standard deduction plus $6,000 senior bonus to lower or eliminate taxes on benefits.
- Key Notes:
- Not Full Tax Relief: The deduction helps but doesn’t remove taxes on benefits for everyone. Poorest seniors (already tax-exempt) and wealthiest (above phase-out limits) won’t benefit.
- Temporary: The deduction ends in 2028 unless extended.
- Future Risks: The deduction reduces Social Security trust fund revenue by ~$30 billion yearly, potentially pushing insolvency to late 2032 (from 2033). Without fixes, benefits could drop to 77% of current levels by 2033. Medicaid cuts may also strain seniors relying on both programs.
What This Means for You
- Middle-Income Seniors: If your income is under $75,000 (single) or $150,000 (joint), you may pay less or no taxes on Social Security starting in 2025.
- Low/High-Income Seniors: If you don’t pay taxes now or have high income, this deduction may not help.
- Planning Ahead: Medicaid cuts and Social Security’s funding issues could affect your healthcare and benefits.
Contact us if you have any specific questions about the bill or how it may impact your insurance and retirement planning.
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