Economy·Oct 2, 2026
Trump's Social Security Tax Cut Would Favor Retirees Earning Over $25,000
Benefits taxed on a sliding income scale mean ending the tax would deliver the biggest gains to higher earners, economists say.
President Trump's proposal to eliminate federal taxes on Social Security benefits would primarily benefit higher-income retirees, since they already pay the bulk of taxes on those benefits while more than half of lower-income retirees pay none, according to GoBankingRates.
Under current law, individuals earning below $25,000 ($32,000 for joint filers) pay no tax on their benefits, those earning between $25,000 and $34,000 ($32,000 to $44,000 jointly) pay tax on up to 50% of benefits, and retirees above those thresholds pay tax on up to 85%. Economist Wayne Winegarden of the Pacific Research Institute said the benefit of eliminating the tax grows with income.
The plan is separate from last year's One Big Beautiful Bill Act, which added a $6,000 to $12,000 senior tax deduction that can indirectly reduce or eliminate taxes some seniors owe on benefits without ending the tax outright. Revenue from Social Security benefit taxes helps fund the program's trust fund, which economists expect to be depleted by 2033.
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