Republican presidential nominee and former U.S. President Donald Trump arrives to speak at his rally during the 2024 U.S. Presidential Election, in Palm Beach County Convention Center, in West Palm Beach, Florida, U.S., November 6, 2024.
Brendan Mcdermid | Reuters
On the campaign trail, Republican presidential candidate Donald Trump made a notable promise to retirees: No taxes on Social Security benefits.
Now that Trump has won a second presidential term, Social Security’s beneficiaries may wonder whether that change may come to pass.
However, nixing those taxes may be a difficult task, even if Trump has a Republican majority in both the Senate and the House of Representatives. Any changes to Social Security would require at least 60 Senate votes, and Republicans would, therefore, need some Democratic support to pass those changes.
Just eliminating taxes on benefits, without any other changes to make up for that loss in revenues, would worsen the program’s current funding woes, experts say.
“It’s hard for me to imagine that Democrats would be willing to provide votes to get over that 60-vote threshold and weaken Social Security solvency,” said Charles Blahous, senior research strategist at the Mercatus Center at George Mason University, who has also served as a public trustee for Social Security and Medicare.
“I think a lot of Republicans would have heartburn about it, too,” he said.
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Ending taxes on Social Security benefits — along with other Trump proposals to end taxes on tips and overtime, impose tariffs and deport immigrants — would “dramatically worsen” Social Security’s finances, the Committee for a Responsible Federal Budget found in a recent report.
The Trump campaign has pushed back on those findings, calling the Committee for a Responsible Federal Budget “consistently wrong” in a statement to CNBC when the report was released.
The campaign did not respond to a request for comment on Wednesday about where the proposal stands on Trump’s priority list following his inauguration.
The Social Security trust fund used to help pay retirement benefits is projected to run out in 2033, according to the program’s actuaries. At that time, beneficiaries could see across-the-board benefit cuts, though the president may have the ability to determine how those reductions are distributed among beneficiaries, according to recent research.
Higher-Income Seniors Would Benefit Most
Experts say those who would benefit most from eliminating taxes on Social Security benefits would be the wealthy.
Households with between $63,000 and $200,000 in income would benefit most from the change, according to an August analysis from the Urban-Brookings Tax Policy Center.
Lower-income households making $32,000 or less would not get a tax cut, as most of their Social Security benefits are not currently taxed. Meanwhile, those with between $32,000 and $60,000 in annual income may see about $90 in tax cuts, according to the research.
