House GOP Tax Plan Proposes $4,000 Deduction for Seniors as Alternative to Ending Social Security Tax

House Republicans have introduced a proposal for a temporary $4,000 tax deduction aimed at seniors, as part of their “One, Big, Beautiful” tax bill. The deduction is positioned as a more cost-effective alternative to eliminating taxes on Social Security benefits.

The provision, referred to in the bill as a “bonus,” would be available to individuals aged 65 and older who meet certain income criteria. It would apply from tax years 2025 through 2028. The deduction phases out for single filers earning more than $75,000 and for married couples filing jointly with incomes above $150,000.

A spread of U.S. dollar bills is shown alongside a calculator | Source: Pexels

“It’s actually probably less than 20% of the size of the tax cut that was initially pitched during the campaign,” said Garrett Watson, director of policy analysis at the Tax Foundation. The deduction is expected to cost about $200 billion over a decade, compared to over $1 trillion for eliminating taxes on Social Security benefits.

The proposal fulfills a campaign promise made by former President Donald Trump, according to White House assistant press secretary Elizabeth Huston. “The bill provides a ‘historic tax break’ to seniors receiving Social Security,” Huston said.

Unlike a tax credit, which reduces tax liability directly, the deduction reduces the amount of taxable income. A median-income retiree earning around $50,000 may see a tax reduction of less than $500 annually, said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.

A stack of fifty-dollar bills is placed next to a lightbox | Source: Pexels

“This is clearly a better way to do it than the original Social Security proposal that Trump had,” Gleckman added.

Because Senate rules prohibit changes to Social Security through reconciliation bills, the deduction offers a legally viable alternative. The measure would be funded through general tax revenue and would not impact the already strained Social Security trust funds.