Trump Social Security Tax Cuts: During last year’s campaign, Trump didn’t hold back, he said “SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!” He doubled down during his 2025 State of the Union speech, saying “no tax on tips, no tax on overtime, and no tax on Social Security benefits for our great seniors.” But now Congress is busy pushing the One Big Beautiful Bill Act (OBBBA), and strangely, there’s no talk of removing taxes on Social Security benefits.
How Social Security Taxes Work?
Lots of people think Social Security checks are always tax-free but that’s not true. The IRS uses something called “combined income” to decide how much of your benefits get taxed. Half your Social Security plus your other earnings and interest is what counts.
- If that total is over $25,000 for individuals or $32,000 for couples, up to 50% of benefits can get taxed.
- If it’s over $34,000 or $44,000 for couples, up to 85% gets taxed.
These numbers haven’t changed since the 1980s, so more retirees are finding their benefits are taxed now. A long time ago, just 10% of retirees paid taxes on Social Security, but now it’s around 40%.
Why the Tax Cut Didn’t Make it into the Bill?
There are two big reasons why lawmakers skipped this tax cut:
- First, rules in Congress like the Byrd Rule say you can’t change Social Security programs as part of a tax bill. That makes removing taxes on benefits nearly impossible through reconciliation.
- Second, the plan would lose a ton of money about $1.5 to $1.6 trillion over the next decade. And we just learned from the new Social Security report that trust funds may run out in 2034. Then payroll taxes might only pay about 80% of benefits. Cutting taxes now could push that depletion even closer.
What’s in the Bill?
Instead of axing taxes on Social Security, Republicans are offering a bonus standard deduction for seniors. In the House plan, people over 65 get an extra $4,000 off their taxable income from 2025 to 2028. The Senate plan would boost that further an extra $6,000. The House GOP even defended it: “Republicans are keeping President Trump’s promise to help seniors afford the cost of living through an expanded senior deduction in The One, Big, Beautiful Bill,” said Chairman Jason Smith.
According to Kiplinger, here are some key points on how the enhanced extra standard deduction would work if approved by Congress and the President.
- The “bonus deduction” would be available from 2025 to 2028
- The full deduction would be available to those with income up to $75,000 (single filers) and $150,000 (joint filers), then would phase out above those levels and completely phase out at $175,000.
- Eligible filers would be able to take the bonus tax deduction whether itemizing or not.
- The bonus tax relief would stack on top of the existing extra standard deduction for those 65 and older.
Trump Social Security Tax Cuts: Impact on Retirees
Lower or Middle-income retirees
For lower or middle-income retirees, the extra deduction could drop their taxable income enough so less of their Social Security gets taxed.
For example, a 67-year-old with $25,000 in benefits and $18,000 from another account might see a cut in taxes because the deduction lowers their so-called “combined income.”
If the $4,000 extra deduction from the House GOP gets approved, it might help some seniors pay less tax. It can bring down their total income, so maybe their Social Security won’t get taxed as much, or maybe not at all.
With that $4,000 bonus and the $17,000 standard deduction coming in 2025, some folks might get a break if they’re just over the line where taxes start. It could help middle-income retirees.
Higher-Income Retirees
If someone makes more than $75,000 alone or $150,000 as a couple, this won’t do much. They’ll still have to pay tax on their Social Security, like usual.
Here’s an example. A 67-year-old retiree gets $50,000 from Social Security and another $100,000 from their retirement savings.
- To figure out how much of their Social Security is taxed, the IRS adds half of their Social Security so $25,000 to their other income. That makes their total combined income $125,000.
- Since that number is way over the IRS limit, 85% of their Social Security about $42,500 gets taxed under the current rules.
But if the tax on Social Security were removed, that $42,500 wouldn’t count as taxable income anymore. That means their total tax bill would be a lot smaller.
With the House’s $4,000 bonus deduction for seniors, this retiree wouldn’t benefit because the deduction phases out at higher incomes. For 2025, they would still receive the increased standard deduction for singles age 65 and older, which is currently $17,000 ($15,000 standard plus $2,000 age addition).
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