Donald Trump loves to surprise the citizens of America with controversial remarks, and what else? New policies, of course! In recent news, he wants to eliminate federal taxes on Social Security benefits, a move that would effectively boost income for nearly half of all retirees.
This idea was one of the agendas that the 78-year-old promised as part of his 2024 campaign, which many thought he could not keep. While millions of people who regard the Social Security Fund as their lifeline might do a happy dance, there’s a bigger analysis behind this decision.
Donald Trump first talked about this new policy or idea on Truth Social in July 2024 and has since restated his plans to make a better future for the people of the country. He promised to bring change in several strata, including for Social Security, tips, and overtime, under what he calls ‘The One, Big, Beautiful Bill.’
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As per media sources, experts say that this move could weaken the Social Security program in the future. For clarity, right now, retirees with higher incomes have to pay taxes on part of their Social Security benefits. This tax brings in billions of dollars each year to help keep the program running. If those taxes are removed, Social Security could run out of funds faster.
Meanwhile, the Social Security program, which was first introduced in 1984 and expanded in 1993, was originally expected to impact just 10% of retirees. However, since the criteria set for the benefits haven’t been adjusted due to inflation, nearly 50% of beneficiaries now pay taxes on a portion of their benefits, and removing this tax would certainly mean more take-home income for many.
Furthermore, Trump’s idea might be that seniors shouldn’t be taxed on the benefits they’ve earned. It may look like a short-term financial plan, but nothing is more important for America than to prioritize the financial security of its citizens. Therefore, if this bill gets approved, then it could be a long-term loss.
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Social Security relies on three main sources of income. First, 91% of the program’s funding comes from payroll taxes on earned income. Second, about 5% comes from interest on the trust fund’s reserves. And third, which is the most crucial one, is taxing on benefits. In 2023 alone, this tax brought in $50.7 billion. That figure is expected to rise to $132.8 billion by 2033.
Some people support Trump’s logic that since retirees have already paid taxes while working, they shouldn’t be taxed again on their Social Security benefits. But smart financial experts say that removing tax from social security benefits without coming up with an alternative plan could make things worse.
In addition, the Social Security trust fund is predicted to run out by the year 2035. It has become crucial for the government to start making reforms to ensure the sustainability of the program. Reports reveal that millennials can expect a 17% reduction in benefits if an alternative plan is not made in the coming years.
While the fund might not completely run out as yet, its depletion has already been noticed. Moreover, Nasdaq reported that the CEO of ContractorNerd, Charlie Hughes, shared how it isn’t wise for the younger generations to “assume” that they will be receiving their Social Security benefits. “Millennials and Gen Z can’t assume they’ll receive the same benefits as today’s retirees,”
In 2011 the Social Security Trust Fund had approximately $2.67 trillion. Bernie Sanders said that by 2023 it would have around $4.2 trillion.
It peaked in 2020 at $2.9 trillion and has been running a deficit ever since. The fund is now projected to run out by 2035. If that… pic.twitter.com/K5ohVqbNqt
— MAZE (@mazemoore) March 2, 2025
He urged all youngsters to start planning alternative sources of income to remain on the safer side and advised that they should look at bigger investments, pensions, and stocks. A current beneficiary receives a monthly payment of approximately $2,000 from the Social Security Administration. With the existing high cost of living and inflation in most places in America, retirees cannot depend on monthly payments alone.
Donald Trump has a new Social Security Commissioner.
I’m pressing for answers on nearly 200 unanswered questions about his administration’s attempts to cut Americans’ benefits. pic.twitter.com/RYznRXRdhB
— Elizabeth Warren (@SenWarren) May 8, 2025
While Trump is known for his stubborn style of decision-making, where he loves to have the last word, whether his team will execute this plan remains unknown, but what do you think?
In a country where 80% to 90% rely on the benefits, as per an annual survey by Gallup, can people survive without social security, or should the social security taxes be truly removed?
