While on the campaign trail, President Donald Trump promised to end taxes on Social Security benefits. But you won’t find that provision in “The One Big Beautiful Bill” that was signed into law over the summer. While the bill does include a “bonus deduction” for seniors, that isn’t tied to Social Security and doesn’t stop benefits from being taxed.
There are at least three bills pending in the U.S. House and Senate, however, that would eliminate taxes on Social Security benefits. One is Republican Rep. Thomas Massie’s Senior Citizens Tax Elimination Act.
“(Massie has) introduced this bill every single Congress since 2014,” says Sarah Adkisson, senior manager of tax publishing for Eisner Advisory Group LLC in the District of Columbia. “It’s one of his babies.”
But that isn’t the only legislation that would eliminate taxes on Social Security benefits. Democratic Rep. Angie Craig and Democratic Sen. Ruben Gallego have introduced the You Earned It, You Keep It Act in their respective chambers. Like Massie’s bill, this legislation would exclude Social Security benefits from federal income tax.
When it comes to income taxes, 4 in 10 Social Security beneficiaries pay tax on a portion of their benefits, according to the Social Security Administration.
While seniors might welcome the elimination of taxes on their Social Security benefits, analysts warn that the bill could increase the federal deficit. What’s more, some note that eliminating these taxes will accelerate the insolvency date of the Social Security trust funds if the tax revenue is not replaced.
What the Senior Citizens Tax Elimination and You Earned It, You Keep It Acts Do
Massie introduced H.R. 1040 on Feb. 6 to create the Senior Citizens Tax Elimination Act.
“It’s a very short and simple bill,” Adkisson says. “It just says that we’re not going to tax Social Security. Full stop.”
The bill also includes language requiring funds to be transferred into the Social Security trust funds to cover the loss of the tax income. That money is to come “out of any money in the Treasury not otherwise appropriated.”
The You Earned It, You Keep It Act uses a different mechanism to offset the loss of tax dollars to the Social Security trust funds. Rather than requiring transfers from Treasury, it would apply the payroll taxes that fund Social Security to incomes in excess of $250,000 per year. Currently, only the first $176,100 a person earns is subject to this tax.
Analysts differ on how much retirees could save if taxes are eliminated on Social Security benefits. The Senior Citizens League estimates the typical senior household would save about $3,000 annually in 2025. It also says that eliminating taxation on Social Security would make up for 69% of the loss of purchasing power retirees have experienced due to what the league says have been inadequate annual cost-of-living adjustments. Social Security beneficiaries received a 2.5% COLA increase in January.
“Eliminating taxes on Social Security benefits would be an excellent step to provide financial relief to American seniors, many of whom are struggling with a cost of living that is growing much faster than their incomes,” said Shannon Benton, executive director of the Senior Citizens League, in a statement published on the organization’s website earlier this year. “It would also reduce double taxation, which is inherently unjust.”
Others peg the savings as much lower. The Urban-Brookings Tax Policy Center says average savings would be $550, although actual savings could be much lower for some retirees. Social Security beneficiaries with incomes between $32,000 and $60,000 would save about $90 annually in taxes.
“It feels like we’re helping the little guy, but it’s not,” according to Steve Parrish, professor of practice at The American College of Financial Services and a scholar in residence at the Cary M. Maguire Center for Ethics in Financial Services. “This really tends to help higher-income people.”
Retirees with incomes lower than $32,000 won’t see any savings from the bill, according to the Tax Policy Center, because they aren’t likely to pay taxes on their benefits under the current law.
[Read: How Much Could Trump’s Social Security Pick Impact Your Benefits?]
Taxes on Social Security: Who Pays Them
Like many other aspects of Social Security, benefits are taxed in a complex way. The practice was ushered in as part of a 1983 overhaul of the Social Security system, and it’s based on something known as a person’s combined income.
Combined income is defined as the total of the following:
— Adjusted gross income
— Tax-exempt interest income
— Half of a person’s Social Security benefits
Single taxpayers with a combined income exceeding $25,000 will pay income tax on up to 50% of their benefits. Married couples filing jointly will have half their benefits subject to tax once their income exceeds $32,000. If incomes exceed $34,000 for single taxpayers or $44,000 for married couples, up to 85% of benefits may be taxable.
The law stipulates that any tax collected on Social Security benefits must be deposited into the program’s trust funds, and Social Security Administration data reports that this amount was $55 billion in 2024. That amount represented nearly 3.8% of the trust funds’ income for that year.
[Read: When You Need to Pay Taxes on Social Security]
The Downsides of Eliminating Social Security Taxes
Eliminating taxes on Social Security benefits offers a clear benefit to retirees and others who rely on the program for income. However, analysts say it could have long-term negative economic impacts.
“More than 60% of currently living households and over 95% of retirees would benefit from implementing this policy bundle,” according to an analysis conducted by the Penn Wharton Budget Model at the Wharton School of the University of Pennsylvania. “However, all future generations would be worse off,” it adds.
Specifically, researchers estimate that eliminating taxes on Social Security benefits would have the following effects:
— Reduce federal revenues by $1.5 trillion over 10 years
— Increase federal debt by 7% by 2054
— Accelerate depletion of the Social Security trust funds by one year, from 2034 to 2033
— Reduce average wages by 0.4% over 10 years and 1.8% by 2054
It won’t be just the federal government that loses revenue. A handful of states tax all federally taxable income, including Social Security benefits. If Social Security is exempted from federal tax completely, “it could be that those states are going to lose revenue,” Parrish says.
By expanding payroll taxes to incomes exceeding $250,000, the You Earned It, You Keep It Act mitigates some of these potential negative effects. Most notably, rather than accelerating the depletion of the Social Security trust funds, the legislation would extend its solvency for another 24 years, according to an analysis by the Social Security Office of the Chief Actuary. That means the trust funds wouldn’t run dry until 2058, rather than in 2034 as currently expected.
Will Social Security Taxes End?
Massie has introduced legislation to eliminate income tax on Social Security for years. Meanwhile, this is the second legislative session in which Craig has introduced the You Earned It, You Keep It Act. So far, neither has been successful. This year could be different, though.
“It’s a big campaign promise, so I think there will be a political push,” Adkisson says. “The expense is probably the biggest stumbling block.”
If Trump and Republican leaders want to reduce the federal deficit — another stated priority for both — that may be difficult to do while eliminating sources of income as was done with the tax cuts included in the One Big Beautiful Bill Act.
As they consider how to proceed with these bills, members of Congress may find they need to answer a question raised by Parrish: “Is that a good use of very scarce government revenue?”
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Trump Proposed Eliminating Social Security Taxes. Here Are the Bills That Could Make It Happen originally appeared on usnews.com
Update 10/07/25: This story was published at an earlier date and has been updated with new information.
