The Senate gave the green light in July to the so-called “One Big Beautiful Bill Act” (OBBBA), a sweeping tax reform package that promised, among other things, to eliminate federal taxes on Social Security benefits. However, the reality is more nuanced. The law doesn’t fully scrap these taxes but instead introduces a temporary bonus deduction specifically for taxpayers aged 65 and older.
While this measure provides a ray of hope for many retirees, it leaves out a significant group: younger Social Security Disability Insurance (SSDI) beneficiaries. Now, does the SSDI recipients are left behind? Here is what we found out.
SSDI & OBBBA: Will You Pay LESS in Taxes? Find Out Here
Currently, up to 85% of Social Security benefits can be taxed if a recipient’s combined income (half their benefits plus other income) exceeds certain thresholds—$25,000 for individuals and $32,000 for couples. These limits, unchanged since the 1980s, have increasingly subjected retirees to taxes on their benefits. The OBBBA addresses this issue, though not as radically as initially promised.
What does the relief actually look like? The law creates an additional standard deduction of $6,000 exclusively for taxpayers aged 65 and older, applicable from 2025 to 2028. It stacks on top of the regular standard deduction and is available whether filers itemize or not.
According to analyses from the White House and the Council of Economic Advisers, this change is a game-changer: “This deduction means 88% of seniors receiving Social Security will pay zero federal taxes on their benefits,” a spokesperson said. For a single filer with average benefits ($24,000 annually), total deductions will likely exceed taxable income, effectively erasing their tax burden on Social Security.
The impact on SSDI recipients is uneven. Those aged 65 and older qualify for the full bonus deduction, benefiting just like retirees—potentially reducing or eliminating taxes on their disability benefits. However, for SSDI recipients under 65, the picture is starkly different. They do not qualify for the extra $6,000 deduction.
Their benefits remain subject to current tax rules. If their combined income exceeds the existing thresholds ($25,000 individual / $32,000 joint), a portion of their SSDI will still be taxed.
OBBBA deduction helps older retirees — SSDI under 65 get nothing
This age-based exclusion has raised concerns. The ‘senior bonus’ provides no benefit to millions of Americans under 65 receiving SSDI or survivor benefits. For many disabled individuals relying on SSDI as their primary income before traditional retirement, the lack of this tax break adds an unnecessary financial strain that the OBBBA fails to address.
Beyond immediate relief, long-term doubts emerge. Organizations like the Committee for a Responsible Federal Budget (CRFB) warn that reducing revenue from benefit taxes (estimated at $100 billion in 2025 alone) could accelerate the insolvency of Social Security and Medicare trust funds.
Their projection is alarming: insolvency could arrive a year earlier, by 2032, potentially triggering automatic 24% cuts to retirement benefits if Congress doesn’t act. The temporary nature of the deduction (only until 2028) also adds uncertainty to retirees’ long-term financial planning.
The OBBBA delivers real tax relief for the vast majority of retirees aged 65+, partially fulfilling its promise on Social Security taxes. The White House touts this win: “No more taxes on Social Security is a reality in the One Big Beautiful Bill.” Yet the law leaves behind younger SSDI recipients and raises legitimate questions about the long-term financial sustainability of vital social programs. Balancing tax cuts today with solvency tomorrow remains a critical challenge.
What’s the maximum SSDI benefit in 2025?
The SSDI program provides monthly payments to workers who can no longer work due to a severe, long-term disability. To qualify, applicants must have earned sufficient work credits through prior payroll tax contributions. Unlike Supplemental Security Income (SSI), SSDI is not need-based—eligibility depends on work history rather than income/assets.
In 2025, the maximum monthly SSDI benefit is $4,018 for high-earning recipients (though most receive less). The average payment is approximately $1,580, and the vast majority of recipients are getting payments closer to that average.