What Trump’s One Big Beautiful Bill Act means for taxes on Social Security : NPR

Many Americans have received an email from the Social Security Administration applauding Megabill from President Trump.

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Saul Loeb / AFP via Getty Images

In the hours following President Trump’s megabill, President Trump, an email from the Social Security Administration struck the reception boxes for many Americans. He applauded the adoption of the legislation and declared that it included a provision which “eliminates federal taxes on income on social security benefits for most beneficiaries”.

But the experts say that the email was misleading and that what is really in the new law is a little more complicated.

What is in the new law?

Trump campaigned on the promise of “no tax on social security benefits”. But the new law does not create a special exemption for taxes on social security benefits. Instead, this adds a new tax deduction for people 65 and over – and it means that more of them will not pay any tax or less tax on their social security services.

“The legislation adopted means that some people will not pay taxes on their advantages,” said Marc Goldwein, vice-president of the non-partisan committee for a responsible federal budget. “The reason is that it will ensure that some elderly people will not pay taxes, as it increases their standard deduction.”

The new senior deduction is $ 6,000 per year for individuals aged 65 or over.

About this email – and why it’s controversial

On July 3, the Social Security Administration paraded an e-mail with the object line “applauded social security Adoption of law providing history Tax relief for the elderly. “”

The agency is not in the practice of sending political emails, so it was notable.

But that was not the only problem, explains Howard Gleckman, principal member of the Urban-Broooking Tax Policy Center.

“The email was really quite misleading. It included a number of affirms which are simply not true or overestimated or described in a way that will really confuse people,” explains Gleckman.

First, the e -mail implies that the bill has changed the way in which social security services are taxed – and the White House has published a press release “No tax on Social Security is a reality in the main bill”.

But social security benefits are imposed like other income, and this law does not change this.

Second, the e-mail indicates: “The bill guarantees that almost 90% of social security beneficiaries will no longer pay federal income tax on their services.”

Indeed, the Council of Economic Advisers of the White House estimates that by virtue of the new law, 88% of the elderly receiving social security benefits will not pay them any tax.

But Gleckman stresses that by the own estimate of the administration, almost two thirds of social security beneficiaries Already Do not pay taxes on their advantages, because they do not earn enough money for this tax to come into play.

NPR has contacted the Social Security Administration for a response to these criticisms but has not heard. In a press release with a text similar to email, the administration has displayed a correction which deletes the language indicating that the annual deduction of $ 6,000 for the elderly is added to another distinct policy change.

Who will see a tax invoice below this deduction?

It is mainly people in the middle or upper class who will see a difference with the new senior deduction, explains Gleckman. He and his colleagues from the tax policy center believe that around half of the elderly will benefit.

Those who will see the biggest advantage are those who have income between $ 80,000 and $ 130,000. They should receive an average drop in tax of approximately $ 1,100.

Low -income elderly will notice no change in this deduction, as they are already earning too little to pay taxes. And high -income people will not see a change, as people with more than $ 175,000 income or couples of more than $ 250,000 will not be eligible for the new deduction.

The impact of social security tax reductions itself

The email quotes the commissioner of the social security administration Frank Bisignano: “This legislation reaffirms the promise of President Trump to protect social security and helps to guarantee that the elderly can better take advantage of the retirement they have obtained.”

But it depends on what you mean by “protecting”.

Taxes paid on social security benefits directly consult the trustee funds for social security and health insurance A. The reduction of these taxes accelerates the calendar in which these trustee funds will become insolvent.

According to an estimate of the committee of a responsible federal budget, this will now occur at the end of 2032. He estimates that the social security services would be reduced by around 24% unless the congress makes changes before that.

In this way, the reduction in taxes which feeds the trust fund is the opposite of social security protection.