No matter what you’re talking about, taxes seem inevitable, even when it comes to Social Security payouts. However, the reality is that these levies are relatively new.

The federal government started taxing benefits for anyone whose earnings exceeded a specific threshold in 1984. Following a comprehensive revamp of the program by Congress to safeguard the Social Security trust fund from insolvency, the legislation entered into force.

Less than 10% of beneficiaries were required to pay taxes on their benefits when this new taxing policy was implemented in 1984, suggesting that only the wealthiest Americans were required to do so.

However, according to Social Security Administration figures, almost 40% of beneficiaries currently owe tax on their checks because the standards have not been changed frequently enough to reflect the cost of living.

Trump s Social Security campaign promise

Republican presidential candidate Donald Trump strongly declared on social media during the election that he would abolish the tax. Social Security taxes should not be paid by seniors. Later on, he reiterated the idea in interviews, making it a campaign pledge.

Though it might be more difficult and ineffectual than they expect, his base, which is composed of seniors, is hoping to see this new strategy put into effect.

First, everyone should be aware that Social Security payouts are not subject to separate federal or state taxes; only nine US states impose taxes on them.

The entire income is subject to taxation. Those who have no other savings are already tax-free because combined income is calculated as the total of adjusted gross income (AGI), nontaxable interest, and half of the Social Security payment.

Although some people may be forced to pay the lowest amounts, the tax threshold is rather high for those with some savings. Seniors can use the following data from the SSA to ascertain whether or not their benefits are subject to taxes:

Because it is dependent on your combined income, keep in mind that only 50% of your benefits will be subject to taxes.

Social Security’s deficit makes it unlikely that the levy on benefits for seniors would be eliminated, which would make the problem worse.

The harsh truth about eliminating the tax on Social Security benefits

Trump is not the first person who has suggested doing away with this tax; earlier this year, Representative Angie Craig (D-Minn.) filed a bill that would remove Social Security from taxable income starting in 2025. This bill was followed by numerous others. Because of the clear financing deficit in Social Security, none of them have received approval from Congress.

Without congressional support, the Social Security trust funds will run out by 2035, leaving only 83% of planned benefits payable. The Social Security Board of Trustees projects a $22.6 trillion financial gap until 2098. Eliminating the combined income tax, which contributes to program funding, would make this worse.

In an August interview with CNBC, Rep. John Larson (D-Conn.) noted that although Trump’s notion appeals to his supporters, it is not a workable plan. Larson told reporters, “He comes out and says he’s going to have a tax break, but he doesn’t say how he’s going to pay for that.” His plan will essentially reduce the size of the Social Security trust fund.

Also Read: It’s official The list of all Social Security adjustments that will take effect on January 1, 2025, for seniors

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