President Trump has often declared that seniors should not pay taxes on Social Security benefits. While it may just seem like another former campaign promise, the White House moved forward with some big tax policy changes. Getting rid of Social Security taxes sounds great for those who depend on these benefits, but how would this work in the big picture?
Good To Know: 3 Little-Known Social Security Rules That Could Save You Thousands
Up Next: The New Retirement Problem Boomers Are Facing
The One Big Beautiful Bill Act (OBBBA) added fuel to the speculation. However, even a wage-based blessing for retirees on fixed incomes — one of the country’s biggest and most reliable voting groups — can come with implications. So how much would seniors benefit if Trump were to actually succeed in eliminating tax on Social Security benefits? Let’s find out.
How Trump’s Bill Impacts Social Security
After the approval by a Republican-led Congress, Trump signed a bill that includes a tax deduction for seniors but NOT the elimination of taxes on Social Security benefits. Instead of eliminating the tax, the bill introduced a temporary $6,000 tax deduction for seniors aged 65 and older. It will only be effective from 2026 through 2028, though, and has income-based eligibility limits.
The bill is also an umbrella under which many components of Trump’s overall tax plan can be found, such as the Senior Citizens Tax Elimination Act, as well as requiring retirees who exceed income thresholds to pay federal income tax on up to 85% of their Social Security benefits.
However, it turns out that what appears to be a proposal to help the most vulnerable populations with their tax returns would actually benefit wealthy retirees the most. And, the cost in lost revenue could threaten the program’s future and lead to reduced benefits for all.
Find Out: How Much the Average Upper Class Retiree Claims in Social Security Benefits at Age 65
It’s also good to note that eliminating income tax on Social Security benefits could increase the federal deficit by up to $1.6 trillion over 10 years. If Trump’s promise to end taxes on Social Security is passed altogether (again, to be clear, the OBBBA does not eliminate Social Security taxes), households earning between $32,000 and $60,000 annually would get an average tax cut of about $90.
That means that less than 1% of the lowest-earning households (those making about $33,000 or less annually) would get a tax cut, 28% of middle-income households would get a tax cut, and roughly 20% of households earning more than $5 million a year would get a tax cut. According to the Tax Policy Center, “The biggest winners would be those in the top 0.1% of income, who make nearly $5 million or more. They’d get an average tax cut of nearly $2,500 in 2025.”
How Social Security Benefits Are Taxed
About 68 million Americans collect Social Security benefits. As of 2025, the average monthly Social Security retirement benefit was estimated at around $1,999. Most recipients owe nothing to the IRS.
According to the Social Security Administration (SSA), “About 40% of people who get Social Security must pay federal income taxes on their benefits.”
Kiplinger pointed out that the IRS taxes not just retirement benefits, but all payments pulled from the program’s trusts, including disability and survivor benefits, although Supplemental Security Income (SSI) payments are exempt.
Additionally, some states tax Social Security income too, but the president does not have the power to alter that. The federal government taxes or doesn’t tax benefits based on the recipient’s combined income, which includes their monthly Social Security checks.
For single filers:
- Those earning between $25,000 and $34,000 in combined income can be taxed on up to 50% of their benefits.
- Those earning more than $34,000 can be taxed on up to 85% of their benefits.
For couples filing jointly:
- Those earning between $32,000 and $44,000 can be taxed on up to 50% of their benefits.
- Those earning more than $44,000 can be taxed on up to 85% of their benefits.
Final Take To GO: This Could Hurt More Than Help
The bottom line is that the majority of recipients wouldn’t get a tax break, and for most who would, the savings would be negligible. If Social Security taxes are eliminated, it’s not likely you would see much of a difference in your tax return or your budget overall if you’re a lower to average income earner.
In other words, 60% of recipients who the IRS doesn’t tax keep their entire payments because they don’t have enough income to qualify for taxation. For them, Trump’s plan wouldn’t leave them with a single extra dollar.
The rich, however, would reap the lion’s share of the gains (as per usual, some might say). This is because Trump’s plan to repeal Social Security taxes would lead to about 20% of the households earning more than $5 million a year getting a tax cut.
While every dollar counts, $90 in savings pales in comparison to the projected cost of $1.6 trillion in lost revenue over the next decade, which would drive Social Security and Medicare hospital insurance into insolvency faster, resulting in sharply reduced benefits for tens of millions of recipients.
Andrew Lisa contributed to the reporting for this article.
More From GOBankingRates
- 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025
- 4 Things You Should Do if You Want To Retire Early
- 6 Big Shakeups Coming to Social Security in 2025
- How Much Money Is Needed To Be Considered Middle Class in Your State?
This article originally appeared on GOBankingRates.com: Here’s How Much Retirees Would Save If Social Security Taxes Actually Get Eliminated
