Good news for retirees – lawmakers propose legislation to provide bonus tax relief

Retirement just got a little brighter! A new bill is on the table—and it could mean more money in your pocket and less in Uncle Sam’s. Here’s what you need to know:

 Retirees are feeling the squeeze

• Prices are up:
  
  • Food = +2.5%
    
  • Rent & housing = +4.4%
    
  • Health care = +3%
    
• Nearly 50% of retirees now pay federal income tax on their Social Security benefits (it was <10% in the 1980s!)
  
• Why? Tax thresholds haven’t changed since 1983, even though the cost of living has skyrocketed.
  

The bonus tax relief for america’s seniors act

The Bonus Tax Relief for America’s Seniors Act was introduced by Representatives Nicole Malliotakis of New York, Mike Carey of Ohio, and Jimmy Panetta of California. The legislation is bipartisan and seeks to provide meaningful economic relief by raising the bonus standard deduction now available to seniors age 65 and older by more than twofold. By increasing the deductible amounts, the law hopes to reduce retirees’ tax burden they are also experiencing rising cost of living and outdated tax rates, giving them a greater chance of keeping money and dignity at retirement.

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Here’s the upgrade:

• Bonus: Deductions would be adjusted every year for inflation!
  

What does this mean for you

• Lower taxable income = lower or no federal taxes on your benefits
  
• A couple making $85,000/year could save up to $2,100 in taxes annually
  
• More money to spend on what you care about—whether it’s travel, grandkids, or just groceries!

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AARP and retirees are cheering

• AARP’s Nancy LeaMond called it a “commonsense adjustment” that supports Americans who “worked hard and earned their benefits.”
  
• A survey by Allianz Life found:
  
  • 63% of Americans fear running out of money more than dying.
    
  • Inflation is now the #1 concern among retirees
    

Wait… didn’t Trump say he’d end social security taxes?

• Yes, but:
  
  • Completely ending Social Security taxes requires 60 votes in the Senate
    
  • It can’t be done through budget reconciliation, which limits fast-tracking big reforms
    
• So, while Trump’s plan is more ambitious, this bipartisan bill is more realistic and likely to pass.
  

Why this matters

This bill is significant because it addresses budget constraints that seniors face today. Representative Nicole Malliotakis stated that after a lifetime of paying taxes, older Americans deserve to keep more of the money they’ve earned. Her Democratic colleague, Representative Jimmy Panetta, echoed this argument by saying the bill was a move toward retirement security and dignity. With rising costs and dwindling reserves, this bill is a realistic and targeted effort to ease the strain and show deference to the work of those who have spent a lifetime building the country’s economy.

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What’s next?

The Bonus Tax Relief for America’s Seniors Act is now in committee in Congress, where it needs to pass the House and Senate before it can become law. Retirees, groups like AARP, and financial planners are paying attention, a testament to the very real urgency of the tax relief that is a result of rising living expenses. Grassroots pressure is being mounted, with growing numbers of Americans writing to their legislators to continue the pressure to push the bill through. The bill would provide real financial relief to millions of seniors as early as next year if it were to pass. With retirement insecurity and inflation dominating headlines, legislators might act with speed.

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