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A client called me last week wanting to know how to claim a $7,500 tax refund he thought he’d missed.
His question was based on an email sent in early July to Social Security recipients from Frank J. Bisignano, commissioner of the Social Security Administration. It read in part: “...over 35 million American seniors received an average of $7,500 in relief this tax season. If you did not take advantage of the President’s signature tax cut for seniors, I encourage you to review eligibility requirements through the Internal Revenue Service (IRS) website for next year’s tax filing season.”
My client read that as money he could still go collect.
The law doesn’t work that way. The email refers to an additional temporary tax deduction for people age 65 and older created by the One Big Beautiful Bill Act signed on July 4, 2025. For tax years 2025 through 2028, eligible seniors can deduct $6,000 per individual, or $12,000 for a married couple if both qualify. The deduction phases out for taxpayers with modified adjusted gross income above $75,000 for single filers and $150,000 for joint filers, and it disappears entirely above $175,000 (single) or $250,000 (joint).
Misconceptions About Tax Relief
A deduction is not a refund. It reduces taxable income, and what it saves you depends on your tax bracket. For a retiree in the 12% bracket, a $6,000 deduction is worth about $720 in tax savings. For someone whose income is low enough to owe no federal tax, it’s worth nothing. The Treasury Department’s own language says seniors claimed “an average deduction of over $7,500.” The Commissioner’s email turned that into $7,500 in tax relief.
The email also said the 2025 law “allows Americans 65 and older to keep more of their hard-earned Social Security benefits.” This is misleading. The law did not change the formula that determines how Social Security benefits are taxed. Up to 85% is still taxable under the same rules that applied before. The new temporary deduction may lower your overall taxable income, which may lower your tax bill.
Commissioner Bisignano also wrote that the administration is “protecting and strengthening Social Security.” This is contradicted by the 2026 Social Security Trustees Report, released on June 9. It projects that the retirement trust fund will be depleted in the fourth quarter of 2032, a quarter earlier than last year’s projection, and that the combined retirement and disability trust funds will run dry in the third quarter of 2034. After that, payroll tax receipts will cover 83% of scheduled benefits unless Congress acts. One reason for this earlier projection is reduced revenue due to the 2025 tax law that the email is celebrating.
Planning Considerations for Seniors
The deduction does matter for your planning. If you’re thinking about a Roth conversion, an IRA distribution, or selling something for a capital gain between now and 2028, watch how those moves affect your modified adjusted gross income. Landing in the phaseout range could cost you more than the deduction saves. Anything you build around it also needs a plan for when the deduction goes away after 2028. I suggest that, before year’s end, you talk with a tax professional or financial planner appropriate for your circumstances.
I assured my client that he didn’t miss a $7,500 refund. Retirees will be well served to fact-check anything the Social Security Administration sends.
Read more by Rick Kahler:
Rick Kahler, MS, CFP®, CFT™, CeFT®, is the founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.