During the campaign, Donald Trump vowed to end taxes on Social Security benefits.
However, the proposal is not included in the president’s flagship tax and spending law, the Big, Beautiful Act, and for good reason.
Trump’s consolation prize for seniors is far more beneficial than ending the welfare tax.
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Social Security income is necessary for many of the 53.5 million retired worker recipients receiving benefits in November. An annual survey by Gallup, a national polling firm, shows that 80% to 90% of retired respondents rely to some extent on Social Security income to cover expenses.
Protecting Social Security and supporting the financial well-being of the tens of millions of beneficiaries who rely on the program should be a top priority for elected officials in Washington, D.C. — including President Donald Trump.
Before and after taking office for a nonconsecutive second term, Trump promised to end the most unpopular aspects of Social Security. Although his plan received thunderous applause and overwhelming support from his predecessors, he ultimately failed to live up to his oath when the flagship “Big and Beautiful Bill” was signed into law. But little did executives realize that the president’s broken promises would actually benefit them.
President Trump holds a meeting in the Oval Office. Photo credit: Official White House photo by Daniel Torok.
While the president made several promises on Social Security during his campaign and since taking office, the most notable was his promise to end taxes on Social Security benefits.
On July 31, 2024, then-presidential candidate Donald Trump declared (in all caps) in a post on his social media platform Truth Social, “seniors should not have to pay Social Security taxes.”
You’d be hard-pressed to find an aspect of Social Security more annoying to beneficiaries than the taxation of benefits, which is often mistakenly considered a form of double taxation. Not surprisingly, Trump’s proposal during the campaign to end the benefit tax received widespread support from those who receive benefits for retired workers.
Welfare taxes were originally introduced in 1984 following the passage of the 1983 Social Security Amendment, which was signed into law by President Ronald Reagan. Overarching Social Security would bring up to 50% of benefits into federal taxes if temporary income (defined as adjusted gross income (AGI) + tax-free interest + one-half benefit) exceeds $25,000 for an individual or $32,000 for a couple filing jointly. In 1993, a second tax tier was added, allowing federal tax on up to 85 percent of benefits if the provisional income exceeds $34,000 for single filers and $44,000 for joint filers.
These income thresholds were introduced thirty or forty years ago. no way and adjusted for inflation. As a result, more and more older households are required to pay taxes on their Social Security benefits over time.
But despite Donald Trump’s promise to end this obnoxious tax, his flagship tax and spending law has produced no action.
The most likely reason it didn’t make it into the “big, beautiful bill” has to do with the process of passing bills through the Senate. The upper house of Congress requires 60 votes in favor to amend the Social Security Act. Since neither party (Republicans and Democrats) has held a 60-seat majority in the Senate since the late 1970s, any change will require bipartisanship.
Arguably, there is no path for the president to win 60 votes in the Senate to end taxes on Social Security benefits.
Image source: Getty Images.
Given Donald Trump’s hype around ending the welfare tax before and after his election, excluding a provision from the Big and Beautiful Act to end this obnoxious tax might be viewed as a failure. But from that defeat came a victory for seniors who most rely on Social Security income.
Most proposals to change Social Security have merit and shortcoming.
Trump has promised to eliminate the benefit tax, which would help the top half of Social Security recipients but would not provide any monetary benefits to those currently below the temporary income threshold.
The president’s flagship “big, beautiful bill” offers a more favorable consolation prize for seniors. Among the many tax breaks included in the law is a provision that would increase the standard deduction by $6,000 for seniors 65 and older from the 2025 tax year through 2028 ($12,000 for couples filing jointly).
This advanced deduction is available to individuals and couples filing jointly whose modified AGI is less than $75,000 and $150,000, respectively. The phase-out amount is up to $175,000 for single filers and $250,000 for joint filers. Rather than just the top half of earners benefiting from the end of the welfare tax, the advanced deduction is targeted specifically at those who rely most on Social Security income.
Additionally, ending taxes on Social Security benefits would eliminate one of the program’s three funding sources. The Social Security Board of Directors predicts that benefits could be slashed by 23% by 2033, so the program needs to squeeze every penny of revenue it can. Keeping the tax in place ensures that the projected timeline for possible benefit cuts isn’t shaved off several years.
Be warned, this “big, beautiful bill” will have a host of unintended consequences for Social Security. But compared with the financial maelstrom that ending the welfare tax would create, Trump’s broken Social Security promise is an undeniable victory for seniors.
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President Donald Trump failed to deliver on Social Security promise of 2025 — which is actually good news for most seniors Originally Posted by The Motley Fool
