July 8, 2025 • 6 mins
Just as is the case with “No tax on overtime” and “No tax on tips” as I outlined yesterday, the way the tax relief is being delivered is through tax deductions that will be realized when one either files their taxes, or adjusts their federal withholding so that less tax is withheld from paychecks throughout the year.
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Episode Transcript
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Speaker 1 (00:04):
Have a question or topic you want to have addressed,
just ask. This is the Brian Mud Show. Yeah, so
let's talk about what the BBB means for Social Security.
This is brought to you by m Listen Ashes check
Mark Collections. Each day I feature a listener question sent
by one of these methods. You may email me Brian
(00:26):
Mud at iHeartMedia dot com, hit me up on social
at Brian Mud Radio. You may also use the iHeartRadio
talk back feature. We would love it if you wouldn't
chill us and love if you would go into the
iHeartRadio app. You also do this in your car and
the iHeartRadio PRESEP may guess your number one, then the
Brian Mudshow podcast number two. And while you're in there
(00:48):
for a little microphone button you see it, you tap it.
You may lay down a message right there, maybe for
a future Q and A just like this one. BBB's
a bunch of bs. What happened to no tax on
Social Security payments? I've received a lot of questions about
specific aspects of the BBB and what it means to people,
(01:11):
probably more on social Security than anything else. And this
one also kind of highlighted something else that dawned on me,
which is probably requires an explanation why the benefits were
set up as tax deductions rather than just explicitly getting
(01:31):
rid of the taxes in these areas altogether. So I'm
going to do all this. I'm going to address all
of the questions I've received and the kind of the
overarching why it went down this way. So an answer
to that listener, It actually is in the new law,
just not so explicitly. Just as is the case with
(01:52):
no tax on overtime and no tax on tips as
iline yesterday, the way that tax relief is being delivered
is through tax deductions that will be realized when one
either files their taxes or adjust their federal withholding so
that less tax is withheld from paychecks throughout the year.
Specific to Social Security, as I've received again a lot
(02:15):
of requests for information around this, the BBB includes a
six thousand dollars senior deduction for taxpayers aged sixty five
and older, and that could be used in addition to
taking a standard deduction or utomization, effective from tax year
twenty twenty five through tax year twenty twenty eight. So
(02:37):
again it's in place for this year for almost all seniors.
This deduction will effectively eliminate the tax on Social Security
payments one percentage. How many, according to an analysis by
the White House's Council of Economic Advisors, eighty eight percent
eighty eight percent of Social Security recipients, or fifty one
(03:01):
point four million seniors, will no longer pay any federal
income tax on their Social Security payments. The tax savings
applies to seniors with incomes up to seventy five thousand
and adjusted gross income for single filers and one hundred
and fifty thousand for married couples filing jointly, with the
(03:21):
deduction phasing out at higher income levels. The only Social
Security recipients who are not eligible for the tax benefit
are those who opted to collect early between the ages
of sixty two to sixty four, or those who are
above one hundred and six one hundred and seventy five
thousand dollars annually, the level which the deduction phases out entirely.
(03:44):
So as of the twenty twenty four tax here, the
average Social Security recipient sixty five and older paid approximately
one thousand, six hundred and eighty dollars per person, and
federal taxes and Social Security benefits. So you know, if
you are both over sixty five and filing jointly, you're
(04:06):
talking about an average savings here thirty three hundred and
sixty dollars per year just on this one piece. This
is independent of any of the other tax benefits that
are in the BBB. This is just the social security
piece or the senior savings over sixty five, as the
case happens to be. So one of the questions that's
come up with this topic, and for that matter, for
(04:28):
taxes on tips and overtime too, and it kind of
hits at the premise behind the listener's comment is why,
if the objective was to eliminate the burden of income
taxes on social security payments or for that matter, even
tips and overtime, why was it structured this way? Why
(04:48):
not just get rid of those taxes? Right? Well, the
reason that a deduction was used to achieve the outcome
comes down to the use of the reconciliation process to
pass the one big, potentially esthetically policing Act, which Joel
(05:09):
you find to be the one big necessary act. Got
it okay, So, according to Senate rules, altering taxation on
social security payments and tips in overtime for that matter,
is considered a structural change. Okay, so a structural change
(05:29):
to the program. Therefore, to eliminate Social Security taxation, a
new law would need to be proposed that would be
able to achieve at least sixty votes in the Senate
in order to avoid the reconciliation process. All Democrats in
Congress opposed the BBB, making the reconciliation process necessary to
pass the bill. The Senate parliamentarian ruled that the use
(05:52):
of increased deductions to achieve a similar effect was not
a structural change. So that's why the new tax cuts
are handled using deductions, and why for now they are
temporary and the temporary piece here to address that. Remember
the Tax Cuts and Jobs Act that was temporary too,
(06:12):
that was just made permanent, no longer temporary. So there
is the potential here in the future before these expire,
if Congress and the President at the time deem it
desirable to do so, they could go ahead and push
even through maybe reconciliation, to make this permanent. We shall
see when we get there, but anyway, for that reason,
(06:33):
some are suggesting, as was mentioned by the listener who
submitted today's Q and a that no tax on social
security or tips or over time wasn't included in the law.
It was, they were, but with again all Democrats opposed
to the law. Republicans had to get creative and the
way to get it done. So it's always got two
(06:54):
sides of stories, one side effects. Those are the facts.
Have a question or topic you want to have addressed,
just ask. This is the Brian Mud Show. Yeah, so
let's talk about what the BBB means for Social Security.
This is brought to you by m Listen Ashes check
Mark Collections. Each day I feature a listener question sent
by one of these methods. You may email me Brian
(00:26):
Mud at iHeartMedia dot com, hit me up on social
at Brian Mud Radio. You may also use the iHeartRadio
talk back feature. We would love it if you wouldn't
chill us and love if you would go into the
iHeartRadio app. You also do this in your car and
the iHeartRadio PRESEP may guess your number one, then the
Brian Mudshow podcast number two. And while you're in there
(00:48):
for a little microphone button you see it, you tap it.
You may lay down a message right there, maybe for
a future Q and A just like this one. BBB's
a bunch of bs. What happened to no tax on
Social Security payments? I've received a lot of questions about
specific aspects of the BBB and what it means to people,
(01:11):
probably more on social Security than anything else. And this
one also kind of highlighted something else that dawned on me,
which is probably requires an explanation why the benefits were
set up as tax deductions rather than just explicitly getting
(01:31):
rid of the taxes in these areas altogether. So I'm
going to do all this. I'm going to address all
of the questions I've received and the kind of the
overarching why it went down this way. So an answer
to that listener, It actually is in the new law,
just not so explicitly. Just as is the case with
(01:52):
no tax on overtime and no tax on tips as
iline yesterday, the way that tax relief is being delivered
is through tax deductions that will be realized when one
either files their taxes or adjust their federal withholding so
that less tax is withheld from paychecks throughout the year.
Specific to Social Security, as I've received again a lot
(02:15):
of requests for information around this, the BBB includes a
six thousand dollars senior deduction for taxpayers aged sixty five
and older, and that could be used in addition to
taking a standard deduction or utomization, effective from tax year
twenty twenty five through tax year twenty twenty eight. So
(02:37):
again it's in place for this year for almost all seniors.
This deduction will effectively eliminate the tax on Social Security
payments one percentage. How many, according to an analysis by
the White House's Council of Economic Advisors, eighty eight percent
eighty eight percent of Social Security recipients, or fifty one
(03:01):
point four million seniors, will no longer pay any federal
income tax on their Social Security payments. The tax savings
applies to seniors with incomes up to seventy five thousand
and adjusted gross income for single filers and one hundred
and fifty thousand for married couples filing jointly, with the
(03:21):
deduction phasing out at higher income levels. The only Social
Security recipients who are not eligible for the tax benefit
are those who opted to collect early between the ages
of sixty two to sixty four, or those who are
above one hundred and six one hundred and seventy five
thousand dollars annually, the level which the deduction phases out entirely.
(03:44):
So as of the twenty twenty four tax here, the
average Social Security recipient sixty five and older paid approximately
one thousand, six hundred and eighty dollars per person, and
federal taxes and Social Security benefits. So you know, if
you are both over sixty five and filing jointly, you're
(04:06):
talking about an average savings here thirty three hundred and
sixty dollars per year just on this one piece. This
is independent of any of the other tax benefits that
are in the BBB. This is just the social security
piece or the senior savings over sixty five, as the
case happens to be. So one of the questions that's
come up with this topic, and for that matter, for
(04:28):
taxes on tips and overtime too, and it kind of
hits at the premise behind the listener's comment is why,
if the objective was to eliminate the burden of income
taxes on social security payments or for that matter, even
tips and overtime, why was it structured this way? Why
(04:48):
not just get rid of those taxes? Right? Well, the
reason that a deduction was used to achieve the outcome
comes down to the use of the reconciliation process to
pass the one big, potentially esthetically policing Act, which Joel
(05:09):
you find to be the one big necessary act. Got
it okay, So, according to Senate rules, altering taxation on
social security payments and tips in overtime for that matter,
is considered a structural change. Okay, so a structural change
(05:29):
to the program. Therefore, to eliminate Social Security taxation, a
new law would need to be proposed that would be
able to achieve at least sixty votes in the Senate
in order to avoid the reconciliation process. All Democrats in
Congress opposed the BBB, making the reconciliation process necessary to
pass the bill. The Senate parliamentarian ruled that the use
(05:52):
of increased deductions to achieve a similar effect was not
a structural change. So that's why the new tax cuts
are handled using deductions, and why for now they are
temporary and the temporary piece here to address that. Remember
the Tax Cuts and Jobs Act that was temporary too,
(06:12):
that was just made permanent, no longer temporary. So there
is the potential here in the future before these expire,
if Congress and the President at the time deem it
desirable to do so, they could go ahead and push
even through maybe reconciliation, to make this permanent. We shall
see when we get there, but anyway, for that reason,
(06:33):
some are suggesting, as was mentioned by the listener who
submitted today's Q and a that no tax on social
security or tips or over time wasn't included in the law.
It was, they were, but with again all Democrats opposed
to the law. Republicans had to get creative and the
way to get it done. So it's always got two
(06:54):
sides of stories, one side effects. Those are the facts.
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