Proposed removal of taxes on Social Security benefits by President Trump could harm retirees

From Nasdaq.: 2025-02-10 04:36:00

President Trump has proposed eliminating taxes on Social Security benefits, a move supported by politicians from both parties. However, Congress is unlikely to approve such a change due to Social Security’s financial issues. The program faces a shortfall of $23 trillion over the next 75 years. Ending taxes on benefits would worsen the funding problem, potentially leading to benefit cuts as early as 2035. While it may sound beneficial, this move could have significant negative consequences for retirees and beneficiaries.

The taxation of Social Security benefits was introduced in 1983 to address financial troubles in the program. Despite receiving COLAs, the income thresholds for taxation have not been adjusted for inflation, leading to more beneficiaries owing taxes over the years. Social Security relies on payroll taxes for 91% of its revenue, and eliminating taxes on benefits would further strain the program’s finances.

In conclusion, while the idea of eliminating taxes on Social Security benefits may seem appealing, it could exacerbate the program’s funding issues and potentially lead to benefit cuts. It is a complex issue with significant implications for retirees and beneficiaries.



Read more at Nasdaq.: A Big Social Security Change Proposed by President Donald Trump May Be Bad News for Retirees