How Does the Additional Senior Deduction Compare to No Tax on Social Security?

Bottom Line

💡 How Does the Additional Senior Deduction Compare to No Tax on Social Security?. Worth reviewing for potential client impact.

Summary

The increased senior deduction with the phaseout would deliver a larger tax cut to lower-middle- and middle-income taxpayers compared to exempting all Social Security benefits from income taxation and would not weaken the trust funds as much. But given the temporary nature of the policy, it would increase the deficit-impact of the reconciliation bills without boosting long-run economic growth.

Classification

Applies To

Affected Groups

Individual return preparers, Estate and trust practitioners

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