Retired homeowners in Tennessee could soon see major savings on their federal tax bill.

Thanks to the One Big Beautiful Bill recently passed by the Trump administration, a new senior tax deduction will eliminate federal taxes on Social Security income for most recipients.

In Tennessee, an estimated 1.2 million retirees are expected to benefit.

Most Seniors Will Pay No Tax on Social Security

A White House analysis shows that under the new law, 88% of seniors who receive Social Security will owe nothing in federal income taxes on those benefits, up from 64% under previous law.

This change amounts to 14.2 million seniors across the country no longer seeing Social Security taxed.

The benefit comes from a new deduction designed specifically for seniors: $6,000 for individuals and $12,000 for couples over 65. These amounts are layered on top of the standard and senior deductions already in place. Altogether, that means total deductions of up to $23,750 for individuals and $46,700 for couples filing jointly.

Tennessee’s Senior Population and Projected Savings

Tennessee is home to 1.24 million residents aged 65 and over—roughly 17.4% of the state’s total population. The U.S. Census Bureau ranks Tennessee as one of the fastest-aging states in the South.

Of those, about 1.2 million seniors are projected to qualify for the new tax break, based on federal estimates. That comes at a time when many retirees are already stretched thin by increasing costs in housing, healthcare, and insurance.

Tennessee residents are also projected to see modest income gains under the law. Real wages are expected to rise by $3,400 to $6,100, while take-home pay could increase by as much as $9,900 depending on household structure and income level.

Who Benefits Most—and Who Might Miss Out

The senior tax deduction will offer the most savings to retirees who still owe income taxes—particularly middle-income seniors whose earnings place them just above the current deduction thresholds. For these households, the extra $6,000 to $12,000 in deductions may be enough to eliminate their taxable income altogether.

However, not every retiree will benefit. Those already living on Social Security or small pensions—often with little to no tax liability—won’t see their situation change. And wealthier retirees will likely be phased out: the deduction begins tapering off at $75,000 for single filers and $150,000 for couples, and ends completely at $175,000 and $250,000, respectively.

The policy is also temporary, set to expire after the 2028 tax year unless extended by Congress.

A Cushion for Homeowners on Fixed Incomes

For Tennessee’s older homeowners, the deduction arrives at a critical time. Fixed incomes are being tested by higher property taxes, insurance premiums, and utility bills—even in cities like Chattanooga, Knoxville, and Nashville where housing costs are comparatively affordable.

When paired with the expanded SALT deduction cap, the savings could go even further—especially in high-tax counties or for seniors who itemize deductions.

And with a projected COLA increase in 2026, many Tennessee retirees may see both higher Social Security checks and fewer taxes taken out, offering some overdue financial breathing room.

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