How Much Retirees Could Save If Trump Eliminates Social Security Taxes
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Andrew Lisa
Edited by
Chris Cluff
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President Donald Trump has often declared that seniors should not pay taxes on Social Security benefits and continues to push forward to fulfill this political promise. While this sounds great for those who depend on these benefits, how would this work in the bigger picture?
Even a wage-based blessing for retirees on fixed incomes — one of the country’s biggest and most reliable voting groups — can come with implications, but how much would seniors benefit if Trump were to succeed in eliminating the tax on Social Security benefits? It turns out that what appears to be a proposal to help the most vulnerable populations with their tax returns would actually benefit wealthy retirees the most — and the cost in lost revenue could threaten the program’s future and lead to reduced benefits for all.
Here are some key takeaways:
- Retirees who exceed income thresholds could pay federal income tax on up to 85% of their Social Security benefits.
- Republican Rep. Thomas Massiehas introduced the Senior Citizens Tax Elimination Act to end taxation of Social Security benefits.
- Eliminating income tax on Social Security benefits could increase the federal deficit by up to $1.5 trillion over 10 years.
- If Trump’s plan to end taxes on Social Security earned income is passed, households earning between $32,000 and $60,000 annually would get an average tax cut of about $90.
- Less than 1% of the lowest-earning households (those making about $33,000 or less annually) would get a tax cut, 28% of middle-income households would get a tax cut and roughly 20% of households earning more than $5 million a year would get a tax cut.
Keep reading for a closer look at how this change could impact future benefits.
How Social Security Benefits Are Taxed
About 68 million Americans collect Social Security benefits. As of 2025, the average monthly Social Security retirement benefit was estimated at around $1,999. Most recipients owe nothing to the IRS.
According to the Social Security Administration (SSA), “About 40% of people who get Social Security must pay federal income taxes on their benefits.”
Kiplinger pointed out that the IRS taxes not just retirement benefits, but all payments pulled from the program’s trusts, including disability and survivor benefits, although Supplemental Security Income (SSI) payments are exempt.
Additionally, some states tax Social Security income, too, but the president does not have the power to alter that. The federal government taxes or doesn’t tax benefits based on the recipient’s combined income, which includes their monthly Social Security checks.
For single filers:
- Those earning between $25,000 and $34,000 in combined income can be taxed on up to 50% of their benefits.
- Those earning more than $34,000 can be taxed on up to 85% of their benefits.
For couples filing jointly:
- Those earning between $32,000 and $44,000 can be taxed on up to 50% of their benefits.
- Those earning more than $44,000 can be taxed on up to 85% of their benefits.
Those Who Need the Least Help Would Get the Most
The president’s plan would provide tax relief to the 40% of recipients who earn more than the current income thresholds.
“If Donald Trump’s proposal to eliminate income taxes on Social Security benefits becomes reality, it could bring meaningful savings for many retirees, depending on their income and tax bracket,” said Eliza Gwendalyn, certified bookkeeper, tax expert and founder of New York-based bookkeeping firm, Book Media Inc.
“Right now, up to 85% of Social Security benefits can be subject to taxes, which feels like an extra burden when you’re already managing a fixed income,” she explained. “For instance, if you’re receiving $30,000 in Social Security benefits and are currently taxed on half of that at a 12% rate, you could potentially save $1,800 if these taxes are removed — a relief that could go a long way in your budget.”
The rich, however, would reap the lion’s share of the gains.
According to the Tax Policy Center, “The biggest winners would be those in the top 0.1% of income, who make nearly $5 million or more. They’d get an average tax cut of nearly $2,500 in 2025.”
Simply Put: Tax Cuts Benefit Millionaires
If Social Security benefits are eliminated, it’s not likely you would see much of a difference in your tax return or in your budget overall if you’re a lower to average income earner. However, that story has a different narrative if you’re a millionaire. This is because Trump’s plan to repeal Social Security taxes would lead to about 20% of the households earning more than $5 million a year getting a tax cut.
Those Who Need the Most Help Would Get Nothing at All
60% of recipients who the IRS doesn’t tax keep their entire payments because they don’t have enough income to qualify for taxation. For them, Trump’s plan wouldn’t leave them with a single extra dollar.
“Lower-income retirees, who are already exempt from these taxes, wouldn’t see any change,” said Devin Carroll, lead advisor at the retirement planning firm Carroll Advisory Group, where he specializes in Social Security, and whose YouTube and blog content on the subject garners more than 1 million monthly views.
Final Take To GO: This Could Hurt More Than It Could Help
The majority of recipients wouldn’t get a tax break, and for most who would, the savings would be negligible.
“Eliminating taxes on Social Security income would provide some financial relief to retirees, but the impact would be relatively modest,” said Carroll. “According to the Tax Foundation, eliminating these taxes would increase after-tax income by up to 1.1% for higher-income retirees, with an average increase of just 0.6%. Lower-income retirees, who are already exempt from these taxes, wouldn’t see any change.”
The Tax Policy Center’s analysis found that a repeal would lower the average tax bill by $550, but that number is inflated by the wealthy households earning $5 million or more that stand to gain the most. Middle-income retirees earning between $32,000 and $60,000 would get an average tax cut of only about $90.
While every dollar counts, $90 in savings pales in comparison to the projected cost of $1.5 trillion in lost revenue over the next decade, which the Tax Policy Center said would “drive [Social Security and Medicare hospital insurance (HI)] into insolvency faster, resulting in sharply reduced benefits for tens of millions of recipients.”
Caitlyn Moorhead contributed to the reporting for this article.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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Sources
- Eliza Gwendalyn, Book Media Inc.
- Devin Carroll, Carroll Advisory Group
