The Taxability of Social Security

In the One Big Beautiful Bill Act

The Republican’s One Big Beautiful Bill Act (The word “Bill” is part of the name now, even though it’s an Act), is 887 pages long.

But I’m only going to talk about the tax on social security benefits.

Some of you may have gotten a letter from the social security administration (a propaganda arm of the Trump White House, as you’ll see), applauding the new law, stating that it “includes a provision that eliminates federal income taxes on Social Security benefits for most beneficiaries.”

Keep in mind that it would cause problems for the solvency of the Social Security Trust, because the taxes on social security go back into the trust. Removing them essentially increases the payouts from a fund that is already projected to become insolvent. I would suspect that their motive would be to bankrupt the fund and privatize it. If they had actually done this.

But don’t worry (or cheer). Because it’s not true! Unless they have redefined the word “most” to mean “none,” the way they redefined the word “day” in tariff legislation to mean more than a day so that congress wouldn’t have to go on record authorizing the president’s tariff nonsense within the prescribed number of “days.” Remember that? No?

Well, Social Security is still as taxable as it was. They didn’t touch it. What they did instead is they created a new deduction of 6,000 for seniors who are 65 or older. Maybe because it affects the same general demographic, they want to say it’s the same thing? But, if you’re 62 and taking social security, you don’t get the deduction, you get taxed, and if you’re 65 and not yet collecting Social Security, then you get the deduction anyway. 6,000 is also less than what most people get in Social Security, so the benefit only partly offsets the tax.

The deduction phases out as you earn more, so it’s not available to people who make above a certain threshold – and I’m fine with that - but that means it offsets tax for even fewer payers of tax on social security. The two have nothing to do with each other.

And, like all fiscal policy these days, the deduction is temporary. They do that, so they can claim that the impact on the future deficit is less severe, although when they just extended some of the temporary provisions from last time, they claimed that it doesn’t cost anything because they are just extending what was already there, conveniently forgetting that they calculated the cost last time, as if it would expire.

They think we’re stupid.

Here’s how social security was and still is taxed.

If you make 25,000 or less (32,000 if married), from all sources, it is not taxed.

For the next 9,000 (12,000 if married) half is taxed.

After that 85% of it is taxed.

To avoid the tax altogether, you’re likely living on Social Security alone.

I’m not necessarily opposed to a change, but there wasn’t one.