Who Wins and Who Loses in Trump’s Social Security Tax Plan?

This past summer, President Donald Trump proclaimed on Truth Social, “Seniors SHOULD NOT PAY TAX ON SOCIAL SECURITY!”

That may appear to be a boon for pensioners on fixed incomes, who are one of the country’s largest and most reliable voting blocs, but how much will seniors truly benefit if Trump is successful in removing the Social Security tax?

It turns out that what appears to be a proposal to assist the most vulnerable groups would primarily benefit wealthier retirees — and the cost in lost revenue could jeopardize the program’s survival and result in lower benefits for all.

How Social Security Benefits are Taxed

Approximately 68 million Americans get Social Security benefits. As of January 2025, the average monthly Social Security retirement payment is expected to be roughly $1,976. Most receivers owe nothing to the IRS.

According to the Social Security Administration (SSA), “about 40% of people who get Social Security must pay federal income taxes on their benefits.”

According to Kiplinger, the IRS taxes all payments made from the program’s trusts, including disability and survivor benefits, with the exception of Supplemental Security Income (SSI).

Some states also tax Social Security income, but the president has no power to change that. The federal government taxes or does not tax benefits based on the recipient’s total income, including monthly Social Security checks.

Those that need the least help would receive the most.

The president’s proposal would give tax breaks to the 40% of recipients who earn more than the present income limits.

“If Donald Trump’s proposal to eliminate income taxes on Social Security benefits is implemented, it could result in significant savings for many retirees, depending on their income and tax bracket,” said Eliza Gwendalyn, a certified bookkeeper, tax expert, and the founder of New York-based bookkeeping firm Book Media Inc.

However, the wealthy would benefit the most from the advantages.

Those who need the most help would receive nothing at all.

The IRS does not tax 60% of recipients since they do not earn enough to be taxed.

For them, Trump’s plan would result in no more income.

Overall, it would cost much more than it would help, which could jeopardize the program’s future.

The vast majority of recipients would not receive a tax reduction, and for those who did, the savings would be minimal.

According to the Tax Policy Center’s estimate, a repeal would reduce the average tax payment by $550, but this figure is exaggerated by wealthy households earning $5 million or more, who stand to benefit the most. Middle-income retirees earning between $32,000 and $60,000 would receive an average tax decrease of around $90.

Reference: Trump Wants To Eliminate Social Security Taxes: Here’s How Much the Average Retiree Would Save