WASHINGTON — President Donald Trump has consistently proclaimed that the Republican-driven tax and spending cut legislation will completely abolish taxes on federal Social Security benefits. However, this is not entirely accurate.
When scrutinized, Trump’s assertion that there will be “no tax on Social Security” if his proposals become law seems to be a significant overstatement. Both the Senate and House have passed versions of the bill, but neither achieves what Trump has promised to the seniors loomed in voters’ minds.
During his 2024 campaign, Trump assured voters of his plan to remove taxes on Social Security. His sweeping legislative package promises this relief, and he has claimed on Fox News’ “Sunday Morning Futures” that the bill supports “no tax on tips, no tax on Social Security, no tax on overtime.” However, the reality is slightly more complex.
Instead of fully eliminating the tax, both the Senate and the House have approved their versions of a short-lived tax deduction for individuals 65 and older, which impacts income as a whole, not limited to Social Security. Importantly, not every Social Security recipient will qualify for this deduction. It excludes those from lower income groups who aren’t already taxed on Social Security, individuals opting to claim benefits before 65, and those above a specified income level.
The Senate passed a proposal that introduces a temporary $6,000 deduction for seniors over 65, while the House version suggests $4,000. For seniors with adjusted gross incomes not exceeding $75,000, or $150,000 for married couples, this deduction would remove tax obligations under the Senate’s plan. These measures, if enacted, would be in effect from 2025 to 2029 and gradually reduce as income grows.
The White House highlighted via the Council of Economic Advisers that the Senate’s $6,000 deduction would affect 33.9 million seniors, raising the average after-tax income by $670—a move that impacts 88% of Social Security beneficiaries by removing their tax burden. Despite these figures, Garrett Watson of the Tax Foundation points out potential confusion among seniors expecting complete tax relief on Social Security.
The full removal of the Social Security tax would have substantial repercussions across the economy. The University of Pennsylvania’s Penn Wharton Budget Model predicts that eliminating income taxes on Social Security benefits could lead to a revenue loss of $1.5 trillion over a decade, escalating the federal debt by 7% by 2054, and quickening the depletion of the Social Security Trust Fund from 2034 to 2032.
The tax structure on Social Security is a component of broader legislation, with the Senate’s version projected to spike federal deficits by nearly $3.3 trillion from 2025 to 2034, according to the Congressional Budget Office. The administration plans on balancing this fiscal impact through tariff revenue. Separate estimates by the CBO show Trump’s tariff strategy reducing deficits by $2.8 trillion over ten years, though it may shrink the economy, raise inflation, and reduce overall household purchasing power.