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Congress eyes measures to reduce taxes on retirement income

But a removal of taxes on Social Security is not on the table

Updated:

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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.

Photo by Dimitri Karastelev on Unsplash

Key Insights

  • While no current legislation removes federal taxes on Social Security benefits, Congress is considering tax relief for seniors through the reconciliation tax bill.
  • Rep. Nicole Malliotakis introduced H.R. 1130 and H.R. 1129 to significantly boost standard deductions and tax exemption thresholds for retirees.
  • The TRUST Act (H.R. 1129) would double the income thresholds for taxing Social Security benefits—raising them to $50,000 for individuals and $64,000 for couples—while indexing them to inflation to protect long-term value.

While no piece of proposed legislation removes federal income taxes on Social Security, Congress is considering measures to ease the tax burden on seniors. The reconciliation tax bill, also known as the “One, Big Beautiful Bill,” contains a provision to give seniors an additional $4,000 bonus deduction.

Lesser-known measures include two bills introduced in early 2025 by Rep. Nicole Malliotakis (R-NY), aimed at helping seniors better manage the rising costs of retirement. Malliotakis, a member of the House Committee on Ways and Means, rolled out H.R. 1130 – the Bonus Tax Relief for America’s Seniors Act, and H.R. 1129 – the Tax Relief Unleashed for Seniors by Trump (TRUST) Act, both of which target expanded tax deductions and exemptions for Americans aged 65 and older.

Substantial increases to standard deductions

The Bonus Tax Relief for America’s Seniors Act seeks to dramatically increase the “bonus” standard deduction available to senior citizens. If enacted, the bill would raise the deduction from:

  • $1,950 to $5,000 for single seniors, and
  • $3,100 to $10,000 for married seniors filing jointly.

According to Malliotakis’ office, a typical senior couple earning $85,000 per year could save approximately $2,100 annually under the proposed changes.

“Our seniors have worked hard and paid taxes their whole lives. They shouldn’t be punished in retirement,” Malliotakis said when she introduced the legislation. “With inflation crushing fixed incomes, my bills are designed to let seniors keep more of their money and retire with greater financial security.”

Bipartisan effort

The legislation, which is co-sponsored by Rep. Mike Carey (R-OH) and Rep. Jimmy Panetta (D-CA), is positioned as a bipartisan effort to provide meaningful relief to older Americans.

“By increasing the standard deduction bonus and eliminating the marriage penalty, we can give their budgets some much-needed breathing room,” said Carey.

Panetta emphasized the broader goal saying the legislation helps ensure seniors can retire with “the financial dignity they deserve.”

The second proposal, H.R. 1129, the TRUST Act, focuses on the taxability of Social Security and retirement income. The bill would double the current thresholds for tax-exempt retirement income, from:

  • $25,000 to $50,000 for single filers, and
  • $32,000 to $64,000 for married couples.

These thresholds – unchanged since 1984 – would also be indexed to inflation under the TRUST Act, preventing future erosion of the benefit due to rising wages or costs.

Because of the limits, a growing number of Social Security beneficiaries are taxed on their retirement benefits, a trend Malliotakis says is unsustainable.

“When these thresholds were created, fewer than 10% of seniors paid taxes on their Social Security,” she said. “Now, that number has skyrocketed. It’s time we modernize these rules and give our seniors the relief they were promised.”

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