President Trump doubled down that seniors should pay ‘no tax’ on Social Security benefits — so why the hold up? What it means for you (and your money)
President Donald Trump’s campaign promise, “Seniors should not pay taxes on Social Security — and they won’t,” was upheld in the One Big Beautiful Bill Act, which introduced new tax deductions for retirees based on income eligibility — sort of.
While the President has declared that Social Security benefits are now tax-free many times, the reality of what the OBBBA actually allows is rather different. Senate budget reconciliation rules prevent sweeping changes to the Social Security program, meaning that taxpayers above the age of 65 will get a temporary $6,000 tax deduction between 2025 and 2028, subject to income-based eligibility thresholds (1).
In his State of the Union speech in February 2026, the President doubled down (2), stating, “All Democrats … wanted large-scale tax increases to hurt the people instead. But we held strong.”
“And with the great Big Beautiful Bill, we gave you no tax on tips, no tax on overtime and no tax on Social Security for our great seniors,” he explained.
Some of these provisions are for working Americans, so what do retirees actually get?
The Enhanced Senior Deduction could reduce your overall tax bill, but like with many things, there’s a catch. You can only claim the full $6,000 if your modified adjusted gross income (MAGI) is less than $75,000 for an individual, or $150,000 for a couple (3).
The deduction begins to phase out with income levels beyond this, however, and it is not available at all for those individuals whose income is more than $175,000, or $250,000 for a couple.
One bright spot? All people over 65 years of age are eligible to apply, even if they don’t claim Social Security yet.
So, while the President’s repeated claims aren’t exactly true, there is one good reason why retirees ought to be paying taxes in the first place: Completely eliminating taxes on Social Security could cause significant harm to the program.
Here’s why.
How Social Security benefits are taxed now
Before looking for explanations, it’s a good idea to look at how Social Security benefits are taxed now.
The thresholds at which taxes on benefits apply are very low: Benefits are taxed for retirees whose combined income (the total of adjusted gross income, non-taxable interest income and 50% of annual Social Security benefits) exceeds $25,000 at the individual level, or $32,000 at the joint tax-filing level.
Although taxing retirement benefits may seem odd, the purpose of the taxes is clear — those funds ensure the future of the program.
However, the new $6000 reduction isn’t likely to benefit those who need it most: low-income retirees who already pay low or no taxes on their benefits, according to the Institute on Taxation and Economic Policy (4).
Who pays taxes on Social Security benefits?
Social Security gets most of its funding from payroll tax revenue, according to the U.S. Social Security Administration (SSA). But the program also gets money by taxing some retirees on their monthly benefits.
And the number of retirees who are continuing to pay into the program is rising. A 2024 Congressional Research Service report (5) found that the overall share of Social Security benefits paid as federal income taxes rose from 2.2% in 1994 to 6.6% in 2022.
In fact, it’s estimated that about 50% of all Social Security recipients pay federal taxes on their benefits, but their projections suggest more than 56% of Social Security recipients will pay taxes on benefits in 2050.
That number is likely to keep rising due to a combination of factors — one of which is that while Social Security benefits get an annual cost-of-living adjustment, the thresholds for combined income have not been adjusted since 1993.
If these thresholds don’t adjust, the numbers will keep going up — assuming Trump doesn’t do away with taxes on Social Security altogether, like he once suggested (6).
But to be clear, there’s a reason lawmakers never voted to raise the combined income thresholds. The goal was to eventually make it so that all retirees would pay taxes on their Social Security benefits so that the program could have a stronger ongoing revenue stream.
The problem with getting rid of taxes on Social Security
The question remains, who would benefit from cutting Social Security benefits?
According to an analysis by the Penn Wharton Budget Model (7), high-income retirees would stand to gain up to $100,000 in remaining lifetime welfare if taxes on Social Security were eliminated. Meanwhile, workers under the age of 30 would be the biggest losers in this game, with households forgoing about $10,000 in lifetime welfare.
Furthermore, eliminating taxes on Social Security could reduce government revenue by $1.5 trillion over 10 years, as projected by the Penn Wharton Budget Model. It also projects that ending taxes on benefits would deplete Social Security’s trust funds by late 2032, while the Committee for a Responsible Federal Budget suggests it could result in benefit cuts happening as early as 2031 or 2032 (8, 9). Meanwhile, the SSA itself projects that the trust fund for the program will be insolvent by 2033, according to the 2025 Trustees Report (10).
No matter which projection you believe, this is bad news: If Social Security reaches the insolvency point sooner, cuts to benefits could not only hurt today’s retirees but also cause major hardships for working Americans in the future.
That’s important because once Social Security’s trust funds run out of money, sweeping benefit cuts may become inevitable. Social Security is expected to lose a chunk of its payroll tax revenue as baby boomers retire in droves and an inadequate number of workers enter the labor force to replace them.
The aforementioned Congressional Research Service report found that in 2023, the Social Security trust funds were credited with $50.7 billion from the taxation of Social Security benefits, or 3.8% of the trust funds’ total income.
While that’s a relatively small percentage, cutting any sort of revenue could be dangerous, given the program’s impending funding shortfall.
Understanding how these changes could affect you
If you’re starting to worry about how these events could affect your retirement, you might want to consider working with a certified financial advisor.
Finding the right advisor is simpler than ever now with Advisor.com. Their platform connects you with licensed financial professionals in your area who can provide personalized guidance about your retirement plans.
A professional advisor can also help you determine how many years you have left to invest before retirement and assess your comfort level with market fluctuations — two key factors in building the right asset mix for your portfolio.
Padding your retirement fund
Even with the help of a professional, when your financial circumstances hinge upon decisions over which you have no control, it’s sometimes important to take matters into your own hands.
Bulking up your savings and investments is a good way to protect yourself from any impending changes to Social Security benefits.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
SmartAsset (1); PBS (2); ABC7 Bay Area and San Francisco (3); Institute on Taxation and Economic Policy (4); Congressional Research Service (5); CBS News (6); Penn Wharton Budget Model (7); Committee for a Responsible Federal Budget (8), (9); U.S. Social Security Administration (10); Clever Real Estate (11); NAR REALTOR News (12)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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