Former President Donald Trump reiterated his promise to eliminate taxes on Social Security benefits in a recent interview. However, he did not provide specific details on how he plans to fund this proposal. When questioned about how he would offset the revenue lost from eliminating the levy, Trump mentioned focusing on eliminating waste in the federal government.
Trump emphasized that his administration would prioritize taking care of Social Security and ensuring that seniors are not negatively impacted. He highlighted the presence of inefficiencies and excess spending in the government that could be addressed to help finance the tax cut.
Currently, taxes on Social Security benefits generate approximately $94 billion in revenue each year. Seniors are exempt from paying taxes on their benefits if their individual income is below $25,000 (or $32,000 for married couples). Beyond these thresholds, they may be required to pay income tax on a portion of their benefits, with the proceeds contributing to the Social Security retirement trust fund.
An analysis by the Committee for a Responsible Federal Budget projected that eliminating the tax on Social Security benefits could result in federal deficits increasing by $1.6 trillion to $1.8 trillion by 2035 if alternative revenue sources are not identified. This move would also accelerate the depletion of the Social Security retirement trust fund by over a year and exhaust Medicare's hospital insurance trust fund six years earlier than anticipated.
