By Edward Cates, Chair, TSCL
President Trump laid out a major new policy proposal in December on his social media platform, Truth Social. “SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!” he wrote, suggesting that he would like to eliminate the rules that require seniors to pay taxes on up to 85 percent of their benefits, depending on their income.
So, how much would a typical senior save under this proposal? By our estimate, about $3,082 per year, but before we dive into that analysis, the best answer is probably “it depends.”
The Breakdown:
Under current law, the amount of Social Security benefits eligible for income taxes depends on a person’s income and tax filing status. In this case, income is measured using “combined income,” which includes all non-Social Security income plus one-half of Social Security benefits. The thresholds are as follows:
- Combined income under $25,000 (single) or $32,000 (couple): Benefits are not taxed.
- Combined income of $25,000 to $34,000 (single) or $32,000 to $44,000 (couple): 50 percent of benefits are taxed.
- Combined income above $34,000 (single) or $44,000 (couple): 85 percent of benefits are taxed.
Many seniors are already exempt from paying taxes on their benefits, but over half of seniors earn enough that these thresholds—introduced in the 1980s and never adjusted for inflation—come into the equation. Based on recent Census data, inflation figures, and Social Security payments data, we expect the median senior household will bring in about $57,872 in 20251, with about $23,106 of that coming from Social Security benefits2 and the remaining $34,766 to come from earnings. As shown in Table 1 below, we have a combined income of $46,319.
Table 1: Calculating Combined Income
| Note: If you plan to file a joint income tax return, include your spouse’s amounts on lines A, C, and D. | ||
| A | Enter your total amount of Social Security benefits from last year. | $23,106 |
| B | Multiply line A by 50% (0.5). | $11,553 |
| C | Enter your taxable total income (excluding Social Security benefits), such as pensions, wages, interest, ordinary dividends, and capital gains distributions. | $34,766 |
| D | Enter any tax-exempt interest income, such as interest on municipal bonds. | $0 |
| E | Add lines B, C, and D. | $46,319 |
1 TSCL calculated the median U.S. senior household income by taking the Census Bureau’s estimate from 2023 and then applying the 2024 and 2025 Social Security COLAs percentages to it.
2 The income eligible for taxation figure assumes that the average senior household earns $23,106 in Social Security retirement benefits, using the December 2024 Social Security Statistical Snapshot.
3 Combined income is all non-Social Security income plus one-half of Social Security benefits.
The figure in line E is our combined income. This exceeds the $34,000 combined income threshold for single filers and the $44,000 combined income threshold for joint filers. Our hypothetical senior would pay taxes on 85 percent of their benefits, or $19,640 of their Social Security payments, whether filing single or jointly.
In Table 2, you can see the potential impact of eliminating taxes on all Social Security benefits. You’ll see that $54,406 of our hypothetical senior’s income would be taxable under current law, which includes taxes on 85 percent of their benefits. If we eliminated that tax requirement, as President Trump proposes, only the $34,766 they earned before collecting their benefits would be taxable.
Table 2: Calculating Taxable Income
| Note: If you plan to file a joint income tax return, include your spouse’s amounts on lines A, C, and D. | ||||
| SS Benefits Taxed1 | SS Benefits NOT Taxed1 | |||
| A | Enter your Social Security Income eligible for taxation (85% of $23,106). | $19,640 | $0 | |
| B | Enter your total non-Social Security income | $34,766 | $34,766 | |
| C | Add lines A and B. | $54,406 | $34,766 | |
1 SS stands for Social Security.
From here, it’s easy to figure out how much eliminating taxes on benefits would save. As shown in Table 3, we apply federal tax brackets to the amount of income eligible for taxation to determine how much our hypothetical senior would owe the government. It comes to $7,022 under current law, compared to $3,940 under the proposal to remove taxes from Social Security benefits. That’s a savings of $3,082 per year.
Table 3: Applying Tax Brackets to Taxable Income
| Note: If you plan to file a joint income tax return, include your spouse’s amounts on lines A, C, and D. | ||||
| SS Benefits Taxed1 | SS Benefits NOT Taxed1 | |||
| A | Enter your total taxable income. | $54,406 | $34,766 | |
| B | Multiply your first $11,600 of earnings by 10% (0.1). | $1,160 | $1,160 | |
| C | If you entered less than $11,600 in line A, set to $0. Otherwise, subtract $11,600 from line A. | $46,806 | $23,166 | |
| D | Multiply your next $35,550 of earnings by 12% (0.12). | $4,266 | $2,780 | |
| E | If you entered less than $35,550 in line C, set to $0. Otherwise, subtract $35,550 from line C. | $7,256 | $0 | |
| F | Multiply your next $53,375 in earnings by 22% (0.22) | $1,596 | $0 | |
| G | Add lines B, D, and F. | $7,022 | $3,940 | |
These tables are for illustration only. Contact a tax expert for calculating your taxes.
Conclusion
I’m sure you could easily imagine how you’d spend an extra $3,000 per year, so it’s easy to see how the proposal to eliminate taxes on Social Security benefits would have a massive impact on senior citizens if implemented. As we look ahead, the bigger questions supporting this proposal come down to details: How would eliminating taxes on benefits affect Social Security’s finances? Where could we introduce new taxes elsewhere to fund this valuable policy for seniors? What compromises would we be willing to make to get this proposal signed into law?
That’s why we’re here at TSCL. Our job is to give you a voice, to understand how American policy impacts senior citizens, and to make sure someone is standing up for your rights. We’ve long fought to fix the thresholds determining how much of your benefits get taxed, but now, we’ll work toward eliminating those taxes altogether. Please let us know your thoughts. Take our 2025 Senior Survey here.
