Trump promised not to raise taxes on Social Security benefits. Here what experts say

During the election campaign, Republican presidential candidate Donald Trump made a remarkable promise to retirees: no taxes on Social Security benefits.

Now that Trump has won a second term as president, this could lead Social Security recipients to question whether this change will actually happen.

But eliminating these taxes could be a difficult task, even if Trump has Republican majorities in both the Senate and House of Representatives. Any changes to Social Security would require at least 60 votes in the Senate, and Republicans would therefore need some support from Democrats to pass these changes.

Simply eliminating taxes on benefits without other changes to offset that loss of revenue would worsen the program’s current funding problems, experts say.

“I find it hard to imagine that Democrats would be willing to cast votes to exceed the 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 served as public trustee for Social Security and Medicare.

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

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Eliminating taxes on Social Security benefits — along with other Trump proposals to eliminate taxes on tips and overtime, impose tariffs and deport immigrants — would “dramatically deteriorate” Social Security’s finances, the Committee for a Responsible Federal Budget found a current report.

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

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

The Social Security trust fund used to pay retirement benefits is expected to run out in 2033, according to the program’s actuaries. At that point, beneficiaries could endure across-the-board benefit cuts, although recent research suggests the president may be able to determine how those cuts are distributed among beneficiaries.

Experts say those who would benefit most from eliminating taxes on Social Security benefits would be the wealthy.

Households earning between $63,000 and $200,000 would benefit most from the change, according to an August analysis by the Urban-Brookings Tax Policy Center.

Lower-income households making $32,000 or less would not receive a tax break because most of their Social Security benefits are not currently taxed. According to the study, people with annual incomes between $32,000 and $60,000 could receive about $90 in tax breaks.

“They are giving a tax break to the older, higher-income population, so their political sellability may also be reduced,” Blahous said.

Currently, up to 85% of Social Security benefits may be taxed based on an individual or married couple’s income. These taxes are determined based on a formula called “combined income,” or the sum of adjusted gross income, nontaxable interest, and half of Social Security benefits.

Individuals must pay up to 85% tax on their benefits if they have a total income of more than $34,000; For married couples, this applies if their combined income is more than $44,000.

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

Because these thresholds are not adjusted, more income from Social Security benefits will be subject to income tax over time.

According to financial advisors, it is currently too early to include the abolition of taxes on social benefits in financial plans.

“You don’t know what the law or policy will look like if it hasn’t even been properly drafted, let alone adopted,” said David Haas, a certified financial planner and owner of Cereus Financial Advisors in Franklin Lakes, New Jersey.

“I wouldn’t jump to conclusions,” he said.