A new Senate bill proposes significant changes to tax law for older Americans, including increased tax deductions. Let's take a closer look.
Tax Deductions for Seniors
According to the Senate proposal, Americans aged 65 and older may receive a $6,000 tax deduction if they meet income and identity requirements. This temporary measure runs from 2025 to 2028 and is applicable only to individuals and couples with Social Security numbers.
Comparison of the Senate and House Versions
While both the House and Senate versions contain the idea of tax deductions for seniors, the House proposed a $4,000 deduction. The Senate introduces a faster phase-out rate of 6% for income above the limit, compared to 4% in the House version. This means the full $6,000 benefit is lost more quickly.
Withdrawal of Social Security Tax Repeal
The repeal of taxes on Social Security benefits was excluded from the bill due to high costs. Given that up to 85% of benefits are taxable for high-income individuals under the current tax code, the decision to introduce a temporary deduction was made instead.
The bill on tax deductions for seniors has significant differences in the proposals from the Senate and House. It is expected that after alignment, the final version will be sent to the President for signature.
