With the passage of the Trump administration’s One Big Beautiful Bill Act (OBBBA), retirement tax relief has arrived for nearly 2 million seniors in North Carolina.

The law features a senior deduction that promises a majority of the state’s retirees will no longer pay federal income tax on their Social Security income.

For many, that could translate into meaningful savings at a time when every dollar counts.

What the Senior Deduction Means for Seniors Nationwide

The OBBBA created a deduction specifically for seniors: $6,000 for individuals over age 65 and $12,000 for qualifying couples. These amounts are in addition to the standard deduction and age-based tax relief already in place. In total, this adds up to $23,750 in deductions for single seniors and $46,700 for married couples.

The result: 88% of seniors will no longer pay federal taxes on their Social Security benefits. That’s a significant jump from 64% before the new law took effect. “This amounts to the largest tax break in history for America’s seniors,” the White House stated, noting that the goal is to help seniors retain more of their income.

Nearly 2 Million North Carolina Seniors Will Benefit

North Carolina has one of the largest populations of seniors in the Southeast. According to federal projections, approximately 1.9 million residents aged 65 and older will benefit from the Social Security tax exemption. That represents around 3.2% of the national 65+ population, according to census data.

The broader economic impact is also worth noting. North Carolina workers are expected to see real-wage gains between $3,500 and $6,400, while inflation-adjusted take-home pay could increase by $7,100 to $10,100. These changes could help working families caring for older relatives or preparing for retirement themselves.

North Carolina will also gain 8,100 new housing units through Opportunity Zone development. While not limited to retirees, these homes may improve housing affordability and availability for aging residents across the state.

A Policy That Leaves Some Behind

Although the senior deduction will help many retirees, it won’t impact all seniors equally. The deduction is not refundable, meaning seniors who already owe no federal income tax—typically those with very limited income—won’t see additional savings.

At the opposite end, high-income retirees will see the deduction phased out. It starts to diminish at $75,000 for individuals and $150,000 for couples, and disappears entirely at $175,000 and $250,000.

Middle-income retired homeowners stand to gain the most—especially those still paying taxes and trying to stretch limited retirement budgets. The increase in the SALT (state and local tax) deduction cap—from $10,000 to $40,000—offers additional savings for retirees facing property tax burdens.

Time-Limited Opportunity

The senior deduction is authorized only through the 2028 tax year. If Congress does not extend it, the benefit will expire—making the next few years critical for retirees to maximize their savings.

For now, however, the OBBBA offers a financial cushion for nearly 2 million seniors across North Carolina. For those hoping to age in place or manage fixed costs more effectively, that cushion could make all the difference.

This article was produced with editorial input from Dina Sartore-Bodo, Gabriella Iannetta, and Allaire Conte.