Trump’s Plan to End Social Security Benefit Taxes: Big Savings for the Wealthy, Modest Gains for Average Americans
Many retirees find it frustrating to pay taxes on their Social Security benefits after years of contributing to the system.
This issue has become more pressing as rising costs push more retirees into taxable income brackets.
In response, Rep. Thomas Massie (R-Ky.) introduced the Senior Citizens Tax Elimination Act, which would exempt Social Security benefits from federal taxation.
While it's uncertain whether the bill will pass, eliminating these taxes would primarily benefit higher-income retirees, as lower-income households already pay little to no taxes on their benefits.
The wealthiest Americans would see the greatest dollar savings, but middle- to upper-middle-income retirees would benefit the most relative to their total income.
However, removing Social Security benefit taxes raises concerns about the program’s long-term sustainability.
Social Security already faces a $23 trillion funding shortfall, and eliminating this tax would further strain its finances.
If the government fails to find alternative revenue sources, Social Security benefits could be reduced by 17% as early as 2035.
While reform is possible, the options become more limited as the trust fund depletion date approaches.
Despite these challenges, retirees can still maximize their benefits through strategic claiming decisions, potentially increasing their annual payments by thousands of dollars.
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