Shocking Truth: Trump’s 2025 Plan to End Social Security Taxes—What It Means for You

There are projected changes to the Social Security program. Every year, tiny tweaks are made to help keep the program relevant and accessible to recipients, but in 2025, due to the presidential election, there may be a shift that few foresee. President-Elect Trump stated during his campaign that he would repeal the federal income tax on Social Security retirement benefits if elected. As a campaign pledge, this sounded incredibly good to his new supporters, mainly since pensioners comprise a significant section of his base. Still, the same individuals shouting for tax elimination will be most affected if executed.

The Cost of Removing the Federal Income Tax from Social Security:

We must first perform some mathematical calculations to determine whether this is a good concept. According to Social Security Administration data, approximately 47.3 million persons received Social Security retirement benefits by the end of 2021, with an average annual payout of $21,228.The entire payments amount to more than $1 trillion.

Tax Assumptions:

If we apply some tax assumptions, such as 75% of those advantages being taxed, the amount is divided evenly between two groups: 50% taxable benefits and 85%. Let us also assume that the 50% group pays 12% tax and the 85% group pays 24%.

While there are a lot of assumptions, the data support the tax exemption in this scenario. If this became a reality, the extra money that retirees would get could change their lives. It would stimulate the economy and allow for more expenditure on non-essential products.

However, the sad reality is that most seniors do not have enough retirement savings, and many have no private assets, leaving them nearly wholly reliant on Social Security income. People may be surprised to learn that Social Security benefits are not taxed independently; they are taxed as part of combined income. Your “combined income” is derived by adding your adjusted gross income, nontaxable interest (such as bond interest), and ½ of your Social Security payments. Once all of this is summed up, you can determine whether or not your income will be taxed.

If you file a federal tax return as an individual and your total income falls between $25,000 and $34,000, you may be required to pay income tax on up to half of your benefits. If it exceeds $34,000, up to 85% of your benefits could be taxed.

If you file a joint return with your spouse and have a combined income of $32,000 to $44,000, you may be required to pay income tax on up to 50% of your benefits. Because approximately 60% of Americans do not have to pay federal income taxes on their Social Security income, most live solely on their Social Security benefits or earn less than $25,000 per year. Given this, only the wealthier taxpayers, who already do not require additional income, would benefit from this tax cut.