Quick Read – Trump’s OBBBA introduced a $6,000 senior tax deduction that is expected to cost Social Security $169 billion between 2025 and 2034. – The deduction accelerates Social Security’s trust fund depletion by one year to 2032, risking sweeping benefit cuts within six…
ars. – Workers should boost IRA and 401(k) contributions now, while current retirees should bank tax savings before the deduction expires in 2028. – As part of his presidential campaign, Donald Trump pledged to do away with taxes on Social Security benefits. He didn’t quite pull that off
But in the interim, a lot of seniors are getting a reprieve from paying taxes on their monthly Social Security checks. Trump’s One Big Beautiful Bill Act (OBBBA) introduced a $6,000 senior tax deduction that’s made it so the majority of people collecting Social Security aren’t paying taxes on their benefits now. But while that may be a good thing for those retirees, it’s a bad thing for Social Security on a whole.
Social Security depends on taxes beyond payroll contributions Many people know that Social Security is primarily funded through payroll taxes. Workers and employers each contribute 6.2% of wages up to an annual taxable earnings limit, with self-employed workers paying both shares. Those payroll taxes provide the vast majority of the revenue that supports retirement, survivor, and disability benefits.