Sunita Somvanshi
Millions of Social Security recipients opened their email last week to find a surprising message from the Social Security Administration (SSA). The email claimed President Trump’s recently passed “Big Beautiful Bill” would eliminate federal income taxes on Social Security benefits for most beneficiaries.
The message stated the bill “ensures that nearly 90% of Social Security beneficiaries will no longer pay federal income taxes on their benefits, providing meaningful and immediate relief to seniors.” The same information appeared on the SSA’s website on Thursday, just before Trump signed the legislation on July 4th.
But fact-checkers and tax experts across the political spectrum unanimously agree: the email was misleading. The bill does not eliminate taxes on Social Security benefits at all.
“The bill doesn’t change the taxation of Social Security benefits,” explained Bobby Kogan, senior director of federal budget policy at the Center for American Progress. The bill’s actual tax provision is quite different from what the SSA email suggests.
What the bill actually does is provide a temporary tax deduction of $6,000 for individuals aged 65 and older ($12,000 for married couples). This deduction applies to all income, not just Social Security benefits. It also has income limitations – the full deduction is only available to those earning less than $75,000 individually or $150,000 for couples. The deduction phases out completely for those earning over $175,000 (or $250,000 for couples).
Additionally, the deduction is temporary, set to expire at the end of 2028.
The Council of Economic Advisers argued that this deduction would effectively result in 88% of seniors (about 51.4 million people) paying no tax on their Social Security benefits. But that’s because some seniors’ overall tax burden would be reduced enough that their benefits would fall below taxable thresholds – not because the bill changed how Social Security benefits are taxed.
Currently, about 56% of Social Security beneficiary families pay some federal income tax on their benefits. Under longstanding tax rules, up to 85% of benefits can be taxed depending on a recipient’s total income. Beneficiaries with combined income below $25,000 ($32,000 for joint filers) pay no tax on benefits. Those with income between those thresholds and $34,000 ($44,000 for joint filers) may have up to 50% of benefits taxed. Above those levels, up to 85% of benefits may be taxed.
The email has sparked strong criticism from former SSA officials and congressional Democrats, who called it “unbelievable” and “unconscionable” for a federal agency to send such a politically charged message.
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“I was deputy commissioner of the Social Security Administration. Appointed by President Biden. The agency has never issued such a blatant political statement,” Jeff Nesbit, a former top SSA official, posted on social media.
New Jersey Representative Frank Pallone called the email “a lie” and the bill “ugly,” saying it was “disturbing to see Trump hijack a public institution to push blatant misinformation.”
The White House and SSA did not respond to multiple news organizations’ requests for comment on the misleading email.
Why wasn’t the bill structured to actually eliminate Social Security taxes? Senate procedural rules. Under the “Byrd Rule,” named after the late Senator Robert Byrd, the budget reconciliation process used to pass the bill cannot include changes to Social Security.
Some tax policy experts have expressed concerns that the bill could actually worsen Social Security’s financial outlook. The program is already projected to deplete its trust fund by 2034 – one year earlier than previous estimates. At that point, benefits would be cut by 19% unless Congress takes action.
According to Penn Wharton Budget Model, eliminating income taxes on Social Security benefits would reduce federal revenues by $1.5 trillion over 10 years and increase federal debt by 7% by 2054.
Tax experts note that lower-income seniors who already pay no tax on their benefits won’t see any change from the new deduction. Middle-income seniors may benefit modestly, while the biggest advantage goes to higher-income seniors below the phase-out thresholds.
The SSA email controversy highlights growing concerns about the politicization of federal agencies. With over 70 million Americans receiving Social Security benefits, the misleading communication has raised questions about public trust in government information regarding retirement security.
For Social Security recipients trying to understand what the new law means for them, the reality is more complicated than the SSA email suggested: some will see modest tax relief through the new deduction, but nobody will see the direct elimination of taxes on their Social Security benefits that was promised during the campaign.
