No Taxes on Social Security? Here’s What Trump’s Plan Means for You
02/04/25 • 13 min
1 Listener
For nearly 50 years after Social Security's inception in 1935, benefits were not subject to federal income taxes. That changed in 1983 when Congress introduced taxation on benefits for higher-income retirees, using a "provisional income" threshold of $25,000 for individuals and $32,000 for couples. However, these thresholds were never adjusted for inflation, leading to a significant increase in the number of retirees paying taxes on their benefits—now nearly 50%.
President Trump has proposed eliminating federal taxation on Social Security, a move that could benefit retirees financially but would accelerate the depletion of the Social Security Trust Fund, currently projected to run out by 2034. Removing taxes could shift the depletion timeline up by about a year, raising questions about alternative funding solutions. Potential fixes include raising payroll taxes, increasing the wage base, or pushing back the full retirement age. While tax relief sounds appealing, long-term sustainability remains uncertain.
Questions answered:
1. Why are Social Security benefits taxed, and how did this change over time?
2. What would happen if Social Security taxes were eliminated, and how could it impact the program’s future?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
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Timestamps:
0:00 - SS payments are taxed?
1:25 - Provisional income
3:18 - Trump's plans for SS
6:17 - The downsides
8:06 - The SS Trust Fund
9:19 - The challenge
11:21 - In the meantime
Create Your Custom Strategy ⬇️
For nearly 50 years after Social Security's inception in 1935, benefits were not subject to federal income taxes. That changed in 1983 when Congress introduced taxation on benefits for higher-income retirees, using a "provisional income" threshold of $25,000 for individuals and $32,000 for couples. However, these thresholds were never adjusted for inflation, leading to a significant increase in the number of retirees paying taxes on their benefits—now nearly 50%.
President Trump has proposed eliminating federal taxation on Social Security, a move that could benefit retirees financially but would accelerate the depletion of the Social Security Trust Fund, currently projected to run out by 2034. Removing taxes could shift the depletion timeline up by about a year, raising questions about alternative funding solutions. Potential fixes include raising payroll taxes, increasing the wage base, or pushing back the full retirement age. While tax relief sounds appealing, long-term sustainability remains uncertain.
Questions answered:
1. Why are Social Security benefits taxed, and how did this change over time?
2. What would happen if Social Security taxes were eliminated, and how could it impact the program’s future?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - SS payments are taxed?
1:25 - Provisional income
3:18 - Trump's plans for SS
6:17 - The downsides
8:06 - The SS Trust Fund
9:19 - The challenge
11:21 - In the meantime
Create Your Custom Strategy ⬇️
Previous Episode
Root Talks: Introducing the New Root Retirement Community
Join the new Root Collective HERE!
Retirement isn’t just about having enough money—it’s about making the most of it. That’s why we’re launching a new retirement community designed to go beyond financial planning. Sure, we’ll cover investing, tax strategies, and estate planning, but we’re also creating a space to talk about the things that make retirement fulfilling—connection, travel, health, and purpose.
Inside, you’ll be able to engage with like-minded peers, get expert insights, and explore ideas to shape the next chapter of your life. We’ll have guest speakers, live events, and interactive discussions to help you feel confident in your planning and inspired about what’s ahead.
Root clients get free access, and for everyone else, it’s $50 per month—early adopters can join for just $20. If you’re looking for more than just financial advice, we’d love for you to be part of it.
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On the Ready For Retirement podcast: Apply Here
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0:00 - A new retirement community
2:56 - Sharing experiences, creating initiatives
4:22 - Goal: best possible retirement
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Create Your Custom Strategy ⬇️
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Not everyone needs one, but knowing when professional support can make a real difference? That’s the key.
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
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3:56 - Asset allocation
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18:35 - Asset location
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Ready For Retirement - No Taxes on Social Security? Here’s What Trump’s Plan Means for You
Transcript
Social Security began in 1935 , and for almost the first 50 years of the program , none of those benefits were subject to federal income taxes . Fast forward to today and almost 50% of workers are paying federal taxes on those Social Security benefits they receive . In today's video , we're going to talk about a brief history of how this came to be . We're going to talk about comm
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