Your SSN & the BBB

This will be the first of a series on the Big Beautiful Bill signed into legislation. It is to keep you informed. We do not render an opinion nor get caught up with media or political blasts. It is solely to report the facts. You are our clients, and you should know. NO BS!!!

President Biden signed the Social Security Fairness Act allowing those receiving a state or local pension to also collect Social Security benefits, assuming they had the “quarters”. This was a good act so that more money would be going to those that contributed. But the additional income is taxable.
 
You may have heard speculation that Social Security would become tax free. It’s even been stated that 90% of Social Security beneficiaries will no longer pay income taxes on their benefits. Did it happen with the Big Beautiful Bill?

Not exactly…

Instead of directly addressing the taxability of Social Security benefits, what it did was increase the personal exemption for taxpayers 65 and over. An additional $6,000 personal exemption deduction ($12,000 MFJ) is allowed - reducing the overall taxable income. The Social Security Administration states that 90% of recipients will expect relief from taxation on their Social Security benefits.

Confusing? Yup!

It is true that those of age 65 & over will pay less tax, but it did not officially eliminate taxes on your Social Security benefits. The old rules apply, meaning that depending on your income level, up to 85% of your Social Security benefits are taxable. So you might think of this development as follows: Whatever the taxability of your Social Security benefits was, it is now $6000 less taxable.
 
Back to the Social Security Fairness Act:
For those of you who are already getting a state/local pension (or just started), and are now also starting to receive Social Security benefits, it would be wise to see what the tax implications are. We are doing that so you won’t be surprised once your 2025 return is prepared. DO IT SOON!
 
If you did not pay the exorcist, do you get repossessed?