What's The Same, What's Different - Suze Orman Tackles How The 'One Big Beautiful Bill Act' Affects Your Social Security

If you're nearing retirement or already collecting Social Security, the new "One Big Beautiful Bill Act" might have you wondering how it will impact your benefits — and your taxes. 

Financial expert Suze Orman recently tackled these questions on her "Women & Money" podcast, breaking down exactly what the act means for Social Security recipients. Here's what you need to know.

What Hasn't Changed: Social Security Tax Rules Are Still the Same

First off, Orman  was clear about what didn't change. "The rules on taxation of Social Security benefits were not changed. Do you hear me? No changes to Social Security," she said. That means the way your Social Security benefits are taxed remains just like before.

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She even gave a brief history to show how long it's been since certain Social Security rules have changed. 

Since 1983, some people have had to pay taxes on their Social Security benefits if their income goes over certain limits. However, those income limits haven't been adjusted for inflation since 1993. That means more and more retirees are now paying taxes on their benefits — even if they only have a little extra income from things like a pension or part-time work. This has made the tax rules feel outdated to many.

With that in mind, it's important to understand what Orman stresses: the act does not change these tax rules on Social Security benefits themselves. So, while the tax limits may seem unfairly low, the new law doesn't update or adjust them.

What Did Change: A New Deduction for Those 65 and Older

So, what's new? Orman explains that starting this year, if you're 65 or older, you might be able to claim a $6,000 income deduction. "You are eligible for it even if you have yet to start claiming Social Security," she points out. ‘There is no link between the new tax break and Social Security." 

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If both spouses are over 65, married couples can claim up to $12,000. This deduction is in addition to the existing deductions for seniors — $2,000 for singles and $1,600 for each married person filing jointly.

Income Limits and How the Deduction Phases Out

There are income limits, though. To claim the full $6,000, your modified adjusted gross income, or MAGI, must be under $75,000 for singles or $150,000 for married couples filing jointly. Above those amounts, the deduction gradually phases out and disappears completely if your income goes over $175,000 for singles or $250,000 for joint filers.

Orman explained how the deduction is reduced by six cents for every dollar you earn over the threshold. She gave a clear example: if you make $100,000, you are $25,000 over the limit. Multiply that $25,000 by 6%, which equals $1,500. That amount is subtracted from the $6,000 deduction, leaving you with a $4,500 deduction instead of the full $6,000.

Temporary Benefit That Ends After 2028

Orman also urged listeners to keep in mind that this $6,000 deduction is temporary. Under current law, it will only be available for tax years 2025 through 2028, after which it disappears. The older deductions for seniors remain permanent.

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What This Means for Retirement Planning

Orman reminded listeners that this deduction could affect retirement moves like converting a traditional IRA to a Roth IRA since conversions can increase your taxable income. "If you intend to make any conversions in 2025, 2026, 2027, or 2028, and you will be at least 65, I need you to be aware of how it could impact your eligibility for this $6,000 or $12,000 deduction in each of those years," she said.

For those not yet 65, it might make sense to consider converting more now before this deduction kicks in. Orman recommends talking to a trusted tax professional to figure out what makes the most sense for your personal situation.

Knowing these details can help you better plan your taxes and retirement finances over the next few years.

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