Trump promised no tax on Social Security benefits. here what experts say

On the campaign trail, Republican presidential candidate Donald Trump made a remarkable promise to retirees: No tax on Social Security benefits.

Now that Trump has won a second term as president, it may have Social Security beneficiaries wondering if this change can happen.

But removing those taxes could be a difficult task, even if Trump has a Republican majority in both the Senate and the House of Representatives. Any changes to Social Security would require at least 60 Senate votes, so Republicans would need some Democratic support to pass those changes.

Simply eliminating taxes on benefits, without any other changes to offset this loss in revenue, would exacerbate the program’s current funding problems, experts say.

“It’s hard for me to imagine that Democrats would be willing to give votes to get over that 60-vote threshold and weaken Social Security’s solvency,” said Charles Blahous, senior research strategist at the Mercatus Center at George Mason University, who also has served as public administrator for Social Security and Medicare.

“I think a lot of Republicans would have heartburn about that, too,” he said.

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Eliminating welfare taxes — along with other Trump proposals to end tip and overtime taxes, impose tariffs and deport immigrants — would “worsens dramatically“Social Security’s finances,” the Committee on a Responsible Federal Budget found in a recent report.

The Trump campaign has pushed back on those findings, calling the Committee for a Responsible Federal Budget “consistently wrong” in a statement to CNBC when the report was released.

The campaign did not respond to a request for comment Wednesday about where the proposal ranks on Trump’s list of priorities after his inauguration.

The Social Security fund used to help pay retirement benefits is expected to run out in 2033 according to the program’s actuaries. At that point, recipients could see benefits across the board, although the president may have the ability to determine how those reductions are distributed among recipients, according to recent research.

Households with between $63,000 and $200,000 in income would benefit most from the change, according to a August analysis from the Urban-Brookings Tax Policy Center.

Lower-income households earning $32,000 or less would not get a tax cut, since most of their Social Security benefits are not currently taxed. Meanwhile, those with between $32,000 and $60,000 in annual income could see about $90 in tax cuts, according to the research.

“You’re giving a tax break to the higher-income senior population, so that may end up reducing its political salability,” Blahous said.

Currently, up to 85% of Social Security benefits can be taxed based on an individual’s or couple’s income. These taxes are determined based on a formula called combined income, or the sum of adjusted gross income, non-taxable interest and half of social benefits.

Individuals face up to 85% tax on their benefits if they have more than $34,000 in total income; for married couples that apply if their combined income is more than $44,000.

Individual beneficiaries can pay tax on up to 50% of their benefits on combined income between $25,000 and $34,000, or for married couples on between $32,000 and $44,000.

Because these thresholds are not adjusted, more Social Security benefit income becomes subject to income taxes over time.

For now, financial advisers say it’s too early to factor the elimination of benefits taxes into financial plans.

“You don’t know what the law or policy is going to be if it hasn’t even been properly drafted yet, much less enacted,” said David Haas, a certified financial planner and owner of Cereus Financial Advisors in Franklin Lakes, New York. Jersey.

“I didn’t want to jump to any conclusions,” he said.