If you’ve been following the headlines, you’ve probably heard about President Donald President Trump’s Big, Beautiful Bill—a sweeping tax proposal that’s been making waves in Washington and across kitchen tables nationwide.

But if you’re a retiree, or soon to be one, you might be wondering: What does this bill actually do for Social Security? And more importantly, what doesn’t it do?

Let’s pull back the curtain and take a closer look at what’s really going on with Social Security, President Trump’s campaign promises, and what the latest tax bill means for your wallet.



The Elephant in the Room: Social Security’s Looming Crisis
First, let’s address the elephant in the room. Social Security is facing a financial crunch.

Thanks to a combination of longer life expectancies, a wave of baby boomers retiring, and not enough younger workers paying into the system, the Social Security trust fund is projected to drop to 0% by 2033, as per the latest Trustees Report.

If Congress doesn’t act, retirees could see their benefits slashed by about 21%—a gut punch for anyone relying on those monthly checks.

For many Americans over 60, Social Security isn’t just a line on a government spreadsheet—it’s the backbone of retirement security. With inflation nibbling away at fixed incomes, every dollar counts. That’s why any talk of changes to Social Security gets many Americans’ full attention.



President Trump’s Big Promise: No Cuts, No Age Hikes, and… No Taxes?
During his 2024 campaign, President Trump made a series of bold promises about Social Security.

He pledged not to cut benefits, not to raise the retirement age, which some critics argue is an indirect way to reduce benefits, and to eliminate federal taxes on Social Security benefits altogether.

On the surface, that last promise sounds like a dream come true. After all, who wants to pay taxes on money they’ve already paid into the system for decades?

But as with most things in Washington, it's the details that matter.

Also read: Will the new GOP tax bill cost you $1,600 a year? Here’s what the CBO says



The first major funding source for Social Security is the payroll tax, typically shared between employers and workers. In 2025, wages up to $176,100 per individual are subject to a 12.4% tax that goes straight into the Social Security system. This tax generated about $1.1 trillion last year.

The second source is interest earned from investing the trust fund’s reserves in US government bonds, which brought in nearly $64 billion in net interest income last year.

The third revenue stream comes from taxes on Social Security benefits. Although this brought in a smaller amount—around $54 billion last year—it’s becoming an increasingly important source of income.


Eliminating these taxes, as proposed in Trump’s plan, would hasten the depletion of the Social Security trust fund.

According to the Committee for a Responsible Federal Budget, doing so could shorten the fund’s lifespan by more than a year and increase the necessary benefit cuts from 21% to 25%.

How Social Security Is Taxed (and Why It’s So Confusing)
Let’s break down how the US currently taxes Social Security. The government uses something called “combined income” to decide if you owe taxes on your benefits. Here’s the formula:

- Combined income = Adjusted Gross Income (AGI) + Nontaxable interest + ½ of your Social Security benefits

If your combined income is above certain thresholds—$25,000 for individuals or $32,000 for couples—you could owe taxes on up to 85% of your benefits.



These thresholds haven’t budged since the 1980s, even as the cost of living and average benefits have climbed. That means more and more retirees are getting hit with tax bills every year.

Eliminating Social Security Taxes Isn’t a Silver Bullet
So, why not just get rid of these taxes, as President Trump proposed? Here’s where things get tricky.

Those taxes on Social Security benefits aren’t just a nuisance—they’re a growing source of revenue for the program itself.

Last year, they brought in $54 billion, and that number is only going up. If we ax those taxes, the Social Security trust fund would run out of money even faster, potentially forcing deeper cuts to everyone’s benefits.

And, it's important to note that most lower-income retirees already pay little to no tax on their Social Security. The bottom 40% of households pay less than 1% in taxes on their benefits.

In earlier news: Trump’s “big, beautiful” budget: What it means for taxes, seniors, and immigration



Even the wealthiest retirees, those with household incomes over $205,800, pay an average of just 20% in taxes on their benefits.

So, eliminating the tax would mostly benefit higher-income retirees, while putting the entire system at greater risk.



What’s Actually in the Big, Beautiful Bill?
So, what did make it into President Trump’s tax bill? Instead of scrapping Social Security taxes, the bill offers a $4,000 additional tax deduction for Americans age 65 and older, provided their income stays below certain limits.

This move gives many seniors a bit of breathing room on their taxes, without draining the Social Security trust fund even faster.

For most retirees, this deduction will provide more immediate relief than eliminating Social Security taxes would—without threatening the long-term health of the program.

Read next: Trump’s Big, Beautiful Bill, Part Two: What the fine print means for seniors


Are you feeling the pinch from Social Security taxes? Would you rather see a bigger deduction, or do you think it’s time to eliminate taxes on benefits altogether? What changes would you like to see to keep Social Security strong for future generations? Share your thoughts in the comments below!