Former President Donald Trump this week repeated his plan to eliminate taxes on Social Security benefits for seniors. But the plan could deplete Social Security and Medicare trust funds sooner, policy experts say.
The Republican nominee called for “no tax for seniors on Social Security” during a “Fox & Friends” interview Wednesday and during a press conference at his Mar-a-Lago club in Palm Beach, Florida, on Thursday.
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Some experts have criticized Trump’s plan, citing concerns about the federal budget deficit and the solvency of Social Security and Medicare trust funds.
Repealing the tax could increase the budget deficit by $1.6 trillion to $1.8 trillion through 2035, according to a recent analysis from the Committee for a Responsible Federal Budget.
Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation, described the plan as “unsound and fiscally irresponsible” in a blog post.
Trump’s plan could move insolvency for Social Security, including the disability program, up two years, from 2035 to 2033, according to the Tax Foundation. Insolvency for Medicare could move up six years, from 2036 to 2030.
“President Trump delivered on his promise to protect Social Security and Medicare in his first term” and will “continue to strongly protect Social Security and Medicare in his second term,” Trump campaign national press secretary Karoline Leavitt said in a statement.
She said Trump will boost the U.S. economy and strengthen Social Security, “all the while eliminating taxes on Social Security for America’s well-deserving seniors.”
Cutting tax primarily benefits higher earners
“In the short run, [Trump’s plan] will provide a fairly modest benefit, on average, to Social Security beneficiaries,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center. “But nearly all of that benefit goes to high-income retirees who really don’t need it.”
For 2025, the tax break could save U.S. households an average of $550, according to a Tax Policy Center analysis released Aug. 1. But households could see an average tax break of $90 with income between $32,000 and $60,000 or no benefit with earnings of $32,000 or less.
Roughly 40% of Americans who receive Social Security benefits pay federal income tax, and several states collect taxes on Social Security.
The federal income tax formula uses “combined income,” including your adjusted gross income, non-taxable interest and one-half of Social Security benefits.
With combined income between $25,000 and $34,000 — or $32,000 and $44,000 for married couples filing jointly — up to 50% of Social Security benefits may be taxable. Once combined income exceeds those levels, up to 85% of your Social Security benefits could be subject to tax.
The thresholds don’t adjust for inflation, so “it’s hitting middle-income people who have Social Security benefits and probably a pension or 401(k),” Gleckman said.