Republican lawmakers have introduced a sweeping new tax proposal designed to solidify several long-standing campaign pledges made by former President Donald Trump, including promises related to Social Security.
Among the headline items are plans to eliminate federal taxes on worker tips and overtime pay, alongside efforts to further reduce corporate tax rates. The bill, which recently cleared a key House committee, signals a continuation of the administration’s broader economic agenda.
Yet, according to reporting from CBS News, the measure omits one notable promise that had garnered attention during Trump’s 2023 campaign events — a change that would have directly impacted millions of Americans receiving Social Security benefits.
Social Security Tax Exemption Not Included in House Bill
A proposal to eliminate taxes on Social Security was not included in the bill approved by the House Ways and Means Committee on Wednesday. The legislation would make permanent the 2017 tax cuts initiated under Trump’s first term, while also introducing a series of temporary new tax reductions.
According to Maria Freese, senior legislative representative at the National Committee to Preserve Social Security and Medicare, lawmakers omitted the Social Security provision due to restrictions imposed by the reconciliation process.
This procedure, used to bypass the typical 60-vote Senate threshold, is governed by the Byrd Rule, which prohibits changes to programs like Social Security.
Seniors should not pay taxes on Social Security and they won’t
Mr. Trump declared during an August 2023 campaign rally in Harrisburg, Pennsylvania. But the current legislation falls short of delivering on that commitment.
Enhanced Deduction Replaces Proposed Tax Repeal
Instead of removing taxes on benefits, the bill introduces what it calls an “enhanced deduction for seniors“: a new $4,000 tax deduction for individuals aged 65 and over.
This benefit applies whether seniors itemize deductions or use the standard deduction. Lawmakers say it could provide some financial relief to the roughly 56 million Americans in this age group.
Still, many seniors remain unsatisfied. Maria Freese noted,
I’m sure there are a lot of seniors who would be quite disappointed they will continue to pay taxes on their benefits.
Rising Share of Taxed Beneficiaries
Social Security benefits were not taxed at the federal level until 1984, when legislation signed by President Ronald Reagan introduced taxation above a certain income threshold.
Because those thresholds were never adjusted for inflation, the share of taxed beneficiaries has climbed over the decades.
Today, approximately 40% of Social Security recipients—or about 27 million people—pay federal income taxes on their benefits, up from 26% in 1998, according to data from the Congressional Budget Office and the Social Security Administration.
Fiscal Implications of Repeal
These taxes now generate an estimated $50 billion annually, contributing directly to the funding of Social Security and Medicare.
According to projections by the Peter G. Peterson Institute, eliminating these taxes would advance the depletion of the Social Security trust fund to 2032, one year earlier than current projections, and the Medicare trust fund to 2030, six years earlier.
The think tank warned that ending the taxes would trigger “automatic cuts for millions of beneficiaries.”
Freese criticized the proposal as misleading:
We viewed it as a bait and switch – she said.
You give some seniors a benefit upfront, but don’t tell them that all seniors would run the risk of across-the-board cuts sooner than they would under current law.
