The Biggest Social Security Changes Under President Trump and How They Impact Retirees

Key Points

• President Trump has frequently vowed not to cut Social Security benefits, while also promising to make the retirement program more productive and cost efficient.

• Despite efforts to reduce unnecessary spending, the Social Security Trust Fund that pays retired-worker benefits is still on pace to be depleted by 2033.

• President Trump's "big, beautiful bill" created new deductions that mean 88% of seniors on Social Security will not owe taxes on benefits, but it will also accelerate trust fund depletion.

• The $23,760 Social Security bonus most retirees completely overlook ›

President Donald Trump has frequently promised not to cut Social Security benefits. "I'm not going to touch Social Security, Medicare, Medicaid," he said during an interview with Fox News earlier this year. The president has also vowed to rid the program of fraud, waste, and abuse and pursued that goal tenaciously.

Trump is now 200 days into his second term. While none of the Social Security changes made by his administration have overtly reduced benefits, recent changes to tax law could still have negative consequences for retired workers and other beneficiaries. Read on to learn more.

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Image source: Official White House Photo.

The Social Security Administration is taking action to improve productivity and reduce unnecessary spending

The Social Security Administration (SSA) has worked with the Department of Government Efficiency (DOGE) to increase productivity, reduce unnecessary spending, and eliminate fraud. The most consequential changes to date are listed below:

• Cost savings: The SSA has identified over $1 billion in cost savings through "common-sense approaches in areas such as payroll, information technology, contract and grants, real property, printing, travel, and purchase card policies." That represents about 15% of the estimated administrative expenses in fiscal 2025.
• Workforce reductions: In February, the SSA cut its staffing target to 50,000 workers, down from 57,000. The agency has made progress on rightsizing its headcount, processing 350 deferred resignations and 3,000 voluntary separations through April. Those efforts will eventually lead to cost savings, but deferred resignations and voluntary separations involve incentive payments that will increase spending in the near term.
• Overpayment recovery: The SSA increased the overpayment recovery rate to 50%, up from 10% under the Biden administration. That means retired workers who are overpaid by the SSA will have half of their benefits withheld until the balance is zero. The first notices were mailed in late April, and garnishments began in late July. The SSA estimates it will save $7 billion over the next decade.
• Fraud prevention: In April, the SSA introduced new fraud prevention technology that lets beneficiaries complete all claims by telephone. The agency previously planned to require in-person or online identity proofing. But new anti-fraud capabilities will instead analyze patterns to identify anomalies within accounts, such that in-person identity proofing will only be required when irregularities are detected with phone claims.
• Improved customer service: In July, the SSA provided an update regarding the ongoing push to improve customer service. A new telecommunications platform introduced earlier this year has been rolled out to 70% of field offices, reducing the average speed to answer by 50%, compared to the annual average last year. Also, upgrades to my Social Security will ensure the online portal provides uninterrupted, 24/7 access starting in mid-July.

While changes detailed above are a step in the right direction, the Old-Age and Survivors Insurance (OASI) Trust Fund -- the financial account that pays benefits to retirees, spouses, and survivors -- is projected to run a $3.7 trillion deficit during the next decade. Changes to Social Security under the Trump administration won't come close to solving that problem.

Moreover, the Board of Trustees recently estimated the OASI Trust Fund would be depleted by 2033, at which point benefits would automatically be cut 23% without congressional intervention. But recent changes to tax law could accelerate the time to depletion and deepen the necessary benefit cuts.

A new deduction means nearly 90% of seniors on Social Security will not owe taxes on benefits

On July 4, President Trump's megabill was signed into law. The legislation didn't directly eliminate taxes on Social Security benefits, but it did add a new deduction for seniors aged 65 and older. That deduction is in addition to the existing senior deduction and standard deduction, as detailed below:

• Single seniors with up to $75,000 in income can now deduct $23,750 when completing federal tax returns.
• Married seniors filing jointly with up to $150,000 in income can now deduct $46,700 when completing federal tax returns.

The White House says 88% of seniors on Social Security will not pay taxes on benefit income with the new deductions in place. But the new tax laws come with a downside: Social Security is partially funded by taxes collected on benefits, and some of that revenue will now disappear. The Committee for a Responsible Federal Budget (CRFB) estimates that President Trump's megabill will cut funding by about $30 billion annually.

As mentioned, the OASI Trust Fund was already on pace to be exhausted in 2033. But the CRFB says the "big, beautiful bill" will pull the depletion date forward to 2032, leaving Congress with even less time to find a solution for the funding shortfall that could now exceed $4 trillion in the next decade.

If lawmakers fail to find a fix before the OASI Trust Fund is exhausted, Social Security benefits will automatically be reduced by 24%, according to the CRFB. That's up from the 23% benefit cut anticipated before President Trump signed the "big, beautiful bill" into law.

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