Is No Tax on Social Security in GOP House Bill? What to Know
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
Social Security tax cuts have not been included in the latest draft of the Republican spending bill currently being considered by lawmakers.
On Monday, the House Ways and Means Committee released draft legislation, a centerpiece of President Trump's domestic economic agenda. It proposes raising the nation's debt ceiling by $4 trillion, extends certain tax cuts from his first term, and adds new breaks on tips, overtime pay and auto loans.
The end of Social Security taxes, as promised by the president, is not included in the bill. But instead, millions of seniors could benefit from a new bonus being considered by lawmakers as part of the Republican "big, beautiful" spending bill.
Why It Matters
President Trump vowed to nix taxes on Social Security income during his campaign for the 2024 election, and since his inauguration has repeatedly promised to see the pledge through.
Currently, up to 85 percent of Social Security benefits can be subject to federal income tax, depending on total income. Some 40 percent of benefit recipients currently pay federal income taxes on retirement, spousal and disability benefits—not including Supplemental Security Income (SSI), according to the Social Security Administration (SSA).
Stock image/file photo: A Social Security card with U.S. Dollars.
Stock image/file photo: A Social Security card with U.S. Dollars.
GETTY
What To Know
The deduction begins to phase out at a modified adjusted gross income of $75,000 for individuals and $150,000 for married couples filing jointly.
Taxpayers aged 65 and older already receive a slightly higher standard deduction. Under the proposed bill, they would be eligible to claim both the standard deduction and this additional senior benefit.
The new deduction would apply to tax years 2025 through 2028 and to qualify, the filer—and their spouse if filing jointly—must provide valid Social Security numbers.
Why Haven't Social Security Taxes Been Cut?
Under the Byrd Rule, lawmakers are prohibited from making any changes to Social Security in budget reconciliation legislation. It is named after its chief sponsor, the late Senator Robert Byrd of West Virginia.
The Byrd Rule allows senators to remove provisions from reconciliation bills if they are deemed "extraneous" to the primary goal of budgetary reform. Without this safeguard, committees assigned reconciliation instructions could include numerous unrelated measures in their proposals—some of which might struggle to pass through standard legislative process.
Social Security Solvency
Experts have pointed out that ending Social Security income taxes could have a consequential impact on the trust funds that are used to pay beneficiaries.
Social Security is on track to face major financial shortfalls within the next decade. If a solution is not found in the coming years, benefits could be cut by 17 percent in 2035, according to a 2024 report from the Social Security Administration's (SSA) Office of the Inspector General.
Ending taxation on Social Security benefits would result in around $950 billion in revenue loss for the SSA, according to the The Committee for a Responsible Federal Budget (CRFB), a nonpartisan public policy think tank.
What People Are Saying
Andrew Biggs, a senior fellow at the right-leaning American Enterprise Institute think tank, told MarketWatch: "So, basically, it's a tax cut for seniors, which is intended to cushion the blow of not repealing income taxes on Social Security benefits. Eliminating benefit taxation was neither affordable nor necessary in the first place. But retirees looking forward to a big tax cut might be disappointed."
House Speaker Mike Johnson, via X: "Our 'One, Big, Beautiful Bill' will deliver the America First Agenda. This has been a year in the making, and we will not rest until we get it done for the American people."
What Happens Next
The final draft of the bill could differ from what is currently being proposed as lawmakers. The bill needs to win over nearly every Republican on the floor of the narrowly divided House. If it passes, it will then be considered in the Senate.
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