One Big Beautiful Bill (OB3) Deduction for Qualified Tips (new)

This deduction applies to tax years 2025-2028.

We all heard the repeated campaign promises about “no tax on Social Security.”  Well,…..that’s not quite how it turned out.  Experts estimate that now around 90% of Social Security recipients will not pay tax on this income.

There is no tax exemption or change to the formula for the taxable portion of Social Security.  Instead of an exemption, they give each taxpayer who is 65 or older at year-end an additional standard deduction of $6K.  This means that a married couple who are both 65 or older receives an additional senior deduction of $12K.  This deduction is phased out by income.  Phaseout begins at MAGI of $75K (single)/$150K(MFJ) and ends at $175K / $250K.