Former President Donald Trump has long vowed to protect Social Security. But the bevy of tax breaks he’s promised – including pledging to stop taxing Social Security benefits – could hasten the depletion of the beloved entitlement program’s trust funds and leave seniors with smaller monthly payments.
Trump’s platform would drain critical tax revenue from Social Security’s trust funds, leading them to run out of money by 2031 – three years earlier than currently projected, according to a new analysis from the Committee for a Responsible Federal Budget, a nonpartisan government watchdog. That would force a roughly 30% cut in benefits unless Congress acts.
“I don’t think I’ve ever seen a plan that would have this big of a negative effect on solvency in a general election campaign,” Marc Goldwein, the committee’s senior policy director, told CNN.
Social Security’s finances have long been on shaky financial ground. As the nation ages, the ranks of beneficiaries have surged while the number of workers contributing to the system has shrunk. The program’s combined retirement and disability trust funds are currently scheduled to run dry in 2034, leading to a 23% cut in benefits the following year, according to a Congressional Budget Office analysis, which the committee used for its report. (Social Security’s trustees estimate the combined trust funds would be depleted in 2035.)
If Trump’s proposals were enacted, monthly payments would be 33% smaller in 2035, according to the committee, which did not do a detailed analysis of the impact of Vice President Kamala Harris’ platform on Social Security because it said the changes would be minimal.
The Trump campaign lashed out at the committee’s report, saying that the watchdog has been “consistently wrong throughout the years.”
“By unleashing American energy, slashing job-killing regulations, and adopting pro-growth America First tax and trade policies, President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come, all the while eliminating taxes on Social Security for America’s well-deserving seniors,” Karoline Leavitt, the campaign’s national press secretary, said in a statement.
Cutting taxes on Social Security benefits
During this year’s supertight race for the White House, Trump has rolled out a series of targeted tax breaks in an effort to woo specific voting blocs. In total, these measures – along with a few others – would slash revenue going to the entitlement program by about $2.3 trillion over a decade, the committee found.
The costliest proposal is eliminating federal income taxes on Social Security benefits. This would drain the program’s revenue by $950 billion over 10 years, according to the committee.
Currently, around half of beneficiaries – mainly those with higher incomes – pay federal income tax on their Social Security payments. They owe taxes on their benefits if they earn more than $25,000 per individual, or $32,000 for married couples, of so-called combined income.
Initially, Trump’s measure would favor those earning between roughly $63,000 and $206,000, who would see the largest average boost in their share of after-tax income, according to the Tax Policy Center. Those making more or less wouldn’t see much of a change, if any.
Once Social Security’s trust funds run out of money, though, lower-income recipients would be hit the hardest. They generally would not qualify for the tax break so they’d feel the full brunt of the benefit reduction, Goldwein said. For better-off recipients, the tax relief would offset at least some of the benefit cut.
Eliminating taxes on tips and overtime
The former president has also promised to jettison federal taxes on tips and overtime pay. While he has not provided details on either proposal, he indicated that he would eliminate both income and payroll taxes on tips. (Harris has also vowed to get rid of federal income taxes on tips, but she would continue levying payroll taxes, which support Social Security and Medicare.)
Trump’s move would cut about $900 billion in revenue to Social Security, the committee found.
However, many tipped workers would not benefit from eliminating federal income taxes on tips since they are disproportionately young, unmarried and lower income, and therefore don’t earn enough to pay income tax, according to the Budget Lab at Yale University. Less than 3% of all families would receive a tax cut. The average break would be about $1,700, but for those at the bottom quintile of the income ladder, it would only be $200, on average.
If Trump also eliminates payroll taxes, then virtually all tipped workers would get a tax break, totaling an average of more than $2,100, the Tax Policy Center found. However, these workers would then get smaller Social Security payments after they retire since benefits are tied to earnings reported to the program.
Likewise, workers could receive less from Social Security in retirement if they don’t owe payroll taxes on their overtime compensation. About 12% of hourly workers and 5% of salaried workers worked overtime, according to the Budget Lab at Yale.
The committee also looked at Trump’s tariffs and immigration measures, which it estimated would cut revenue to Social Security by $400 billion over a decade. The former president’s vow to hike tariffs could lead to higher inflation, which would prompt a larger annual cost-of-living adjustment for Social Security. And clamping down on unauthorized immigration and increasing border security could reduce the number of undocumented immigrants paying into the Social Security system.
Trump’s proposals are in keeping with his “overall recklessness with Social Security,” Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare, said in a statement.
“Once again, Trump postures as a friend of the working class, then puts forward plans that endanger the benefits working people have earned — and depend on in retirement,” he said. “It is irresponsible for a presidential candidate to advocate plans that would hasten the insolvency of the Social Security trust fund, triggering an even larger automatic benefit cut if that happens.”
CNN’s Matt Egan contributed to this report.