Former President Donald Trump is advocating for significant changes to Social Security taxes. In a recent post on Truth Social, he declared, “SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!”
Seniors become eligible for Social Security benefits at 62, with their payouts increasing for each year they delay claiming until 70. Unfortunately, many of their earnings are taxed, which reduces their monthly checks that often serve as their primary source of income.
If he wins the presidency again, Trump’s proposed tax reform could have major implications for the financial security of seniors and the Social Security program itself.
Currently, some seniors face taxation on 50% of their Social Security benefits, while others pay taxes on up to 85% if their income exceeds $34,000.
Eliminating taxes on these benefits could provide much-needed relief for seniors grappling with inflation and rising costs for essentials like groceries, housing, and healthcare. However, some skeptics question the authenticity of Trump’s pledge.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, suggested that this promise might stem from concerns over losing crucial votes, especially considering past Republican proposals to increase the retirement age.
Conversely, Aaron Cirksena, a Social Security expert and CEO of MDRN Capital, believes this push aligns with Trump’s broader agenda of tax cuts.
Experts caution that while current retirees may benefit, the future of Social Security could be at risk. Forecasts indicate the program may run out of funds for full payments by the mid-2030s unless changes are made. Reducing taxes could exacerbate this issue.
“The implications would be dire,” said Thompson. “It’s clear that decreasing the funding for a system already facing insolvency is a serious concern.”
If the Social Security system receives less funding, future retirees could face significant benefit reductions.
Michael Ryan, a finance expert, noted that while Trump’s plan “sounds great on paper,” it could ultimately harm future retirees. He pointed out that while current retirees would benefit from tax cuts, the broader financial picture raises serious questions.
“Who’s going to pay? If we cut this revenue, we might see higher taxes elsewhere or reduced spending on other programs. It’s a tricky fix,” Ryan explained.