President Donald Trump Made Changes to Social Security in 2025, but They Fell Short of What He Promised
- - President Donald Trump Made Changes to Social Security in 2025, but They Fell Short of What He Promised
Trevor Jennewine, The Motley FoolDecember 23, 2025 at 7:06 AM
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Key Points -
President Trump implied he could fix Social Security's financial problems by eliminating fraud, waste, and abuse; he also promised to eliminate federal income tax on benefits.
While the Social Security Administration has made several changes that will reduce costs, they come nowhere close to fixing the program's financial problems.
President Trump's "big, beautiful bill" did not end the taxation of Social Security, but rather added a deduction that means some seniors will no longer owe income tax on benefits.
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The Social Security Administration has run a deficit in four straight years, and cash outflows will exceed cash inflows indefinitely unless Congress finds a solution. Consequently, the trust fund -- the account that holds tax contributions for future benefit payments -- is likely to be depleted in 2034. If we reach that point, benefit cuts will happen automatically
President Trump promised to make numerous changes to the retirement program during his recent campaign. "I will not cut one penny from Social Security," he pledged last year. Trump also vowed to end the federal taxation of benefits, and he even said he could "save" the program without cuts by eliminating fraud, waste, and abuse.
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Here's how Social Security has changed under the Trump administration.
President Donald J. Trump stands at a podium with an American flag in the background.
Image source: Getty Images.
The Trump administration has cut Social Security costs, but the changes come nowhere close to eliminating the deficit
The Social Security Administration (SSA), with help from the Department of Government Efficiency (DOGE), has made a several changes to reduce wasteful spending and prevent fraud since President Trump took office.
Cost reductions: The SSA identified over $1 billion in cost savings with "common-sense approaches in areas such as payroll, information technology, contracts and grants, printing, travel, and purchase card policies." That represents about 16% of administrative expenses in fiscal 2024.
Overpayment recovery: In March, the SSA raised its default overpayment withholding rate to 100%, up from 10% under the Biden Administration. The agency estimated the annual cost savings at $700 million. However, the overpayment recovery rate was subsequently cut to 50%, which means the cost savings will be less substantial.
Fraud prevention: In April, the SSA introduced new fraud prevention technology that allows beneficiaries to complete claims by telephone. Improper payments averaged $9 billion annually between fiscal 2015 and fiscal 2022.
Here's the big picture: The changes listed above will undoubtedly reduce costs, but even in the best-case scenario, they will cover a small fraction of the $175 billion deficit the Social Security Administration was projected to run in fiscal 2025. That means the Social Security Trust Fund is still on pace to be depleted around 2034.
The Trump administration introduced a new senior deduction, but it does not entirely eliminate taxes on benefits
The Trump administration did not eliminated taxes on Social Security with the budget reconciliation bill passed earlier this year. Instead, the legislation introduced a new senior deduction (for individuals aged 65 and older) that is additive with the existing senior deduction and the standard deduction, as shown in the chart below:
Deduction
Single Seniors
Married Seniors
New senior deduction
$6,000
$12,000
Existing senior deduction
$2,000
$3,200
Standard deduction
$15,750
$31,500
Total
$23,750
$46,700
Source: The White House.
Importantly, the new senior deduction is gradually phased out for single taxpayers with income over $75,000 and married taxpayers with income over $150,000. in addition, the deduction is currently temporary because the "big, beautiful bill" allows the tax break to expire after 2028 unless Congress extends it.
The good news: 88% of seniors on Social Security will not owe tax on benefits with the new deduction in place, up from 64% before the legislation was passed. The bad news: Social Security is partially funded by taxes collected on benefits. The new senior deduction (by eliminating some of that funding) will accelerate trust fund depletion by about six months.
Here's the big picture: While the new senior deduction means fewer seniors will pay tax on Social Security benefits, the "big, beautiful bill" does not actually end federal taxation of Social Security. in addition, by effectively cutting the program's funding, the new senior deduction leaves Congress with less time to fix the financial shortfall and avoid substantial benefit cuts.
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