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No Tax on Social Security?

Just a quick post today to highlight what could be the biggest change for the finances of retired people in a generation … eliminating Federal income taxes on Social Security.

After seemingly not mentioning it since the election, Trump spokeswoman Karoline Leavitt told reporters yesterday that it is a key part of the budget negotiations that GOP leaders in the House, Senate, and White House are working on.

Here’s the report from the Wall Street Journal (2/6/25) …

The trick will be to get budget-hawks in the party to agree to the change. I’ve seen it estimated at about $150B annually. That’s a huge sum of money that many (including me) will want to see offset with spending cuts / efficiency elsewhere.

That said, 41 states don’t tax SSI themselves. That duplicity might swing some Democrats to support the idea – although it will be easy for them to just complain about the GOP budget overall.

What are your thoughts on the proposal? How much will it help you?

Image: Social Security

15 thoughts on “No Tax on Social Security?”

  1. Sen. Tommy Tuberville has already sponsored a bill to do away with the tax on Social Security. Remember that Social Security wasn’t taxed until 1984 and the compromise that Reagan agreed to didn’t touch most payers until they earned a fairly healthy amount in 1984 dollars. Really bad math, not indexing the taxability for inflation, so that it now impacts middle income retired people. Also recall that Social Security was withheld from your paycheck and then you had to pay Federal and State Income Taxes on the amounts that were withheld.

    DOGE has already found hundreds of billions of in the words of Rep. Jim Jordon of “Stupid Spending” to cut. President Trump has already followed up by shutting down USAID (US Administration for International Development) which has a $50 Billion a year budget. USAID funded the WUHAN Lab Bat Virus Gain of Function research through a grant to Eco Alliance and is directly responsible for the negligent homicide of 25 million people, which easily puts them in the all time Top Ten list for mass killers. USAID staff is getting fired tomorrow.

    DOGE found another $238 Billion in overpayments today made during the last fiscal year. They are expecting to find another $100 Billion in fraud for Medicare and Medicaid. The team is buying out ten of thousands of Federal Government Workers with an eight months severance offer. The back to office order will also result in massive job cuts. The Department of Education will also be dramatically cut and probably completely wound down. The Department of Education was created under Jimmy Carter and has resulted in US Education becoming worse instead of better at higher cost. Wait until they successfully audit the Pentagon for the first time in eight years. Expect Defense purchasing to become more like the tech industry where costs are constantly driven down.

    Trump is expecting to cut $1 Trillion this year and will be balancing the budget in short order.

    Here is fun quiz about the sort of stupid things that USAID was funding. Normally the Babylon Bee is a parody site, but in this case the truth is so shocking, they didn’t need to parody.

    https://babylonbee.com/news/quiz-can-you-guess-which-of-these-things-usaid-actually-funded-and-which-ones-we-made-up

    Finally, President Trump and Elon Musk will put politicians who fight balancing the budget into the modern day equivalent of the pillory by shaming them on social media with X playing a big part. The Legacy Media that has been covering for the crooks in Washington are dying. Politicians who fight the spending cuts will become known as backers of stupid spending that is stealing from taxpayers. The days of the Demonrats threatening to cut basic services that taxpayers want and need to justify their stupid spending is over.

    I also suspect a lot of corruption will be uncovered, so former Sen. Menedez will have a lot of company in prison.

    In case your can’t tell, I am excited by the prospect of a smaller and cheaper Federal Government.

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    1. I think SSI withholding comes out pre-tax on your paycheck. I haven’t had a paystub in a while, but that’s also what I see online. Correct me if I’m wrong.

      The USAID issues were eye opening (and eye rolling!) for me – even though I follow politics pretty closely for my @LibertyDevils Facebook group. The funny thing is that most of these revelations have been “hiding in plain sight”. Senator Rand Paul regularly reported on the waste and I found a couple analyses that showed that only about 10-15% of the USAID $ were even reaching the people they claimed to help. The NGO overhead was sucking up most of the $$$ with most of it staying right in the DC area. Appalling.

      All Musk seems to actually be doing now is bringing this corruption to a bigger audience. Great to see & very entertaining.

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      1. I had to do Self-Employment Accounting for my consulting practice. You only get to subtract the half that is the employer’s half of your Self-Employment tax from your gross income. There is no deduction for your employee ‘contribution’. Social Security also comes out before 401-K deductions. So in my mind, you are paying tax on a tax.

        Whenever raise the argument that you are paying a tax on a tax in other forums, leftists try to play word games that you are not paying a tax on a tax because Social Security withholding is a ‘contribution’.

        Dr. Rand Paul is great. His grilling of Fauci about Gain of Function funding via Eco Health Alliance shed a lot of light on the subject.

        The NGO funding is especially damaging to taxpayers. There are the grants themselves to the NGOs that represent the first hit upon taxpayers. Then the NGOs use the money to break our immigration laws to bring illegals into the country that become public wards, which costs taxpayers even more.

        Many of the NGOs are disguised as church organizations. Many church denominations have been infiltrated by Communists. Our family went to family gathering over the past summer in Madison Wisconsin, so I showed my sons the sites at my old University. You could see the clearly the Marxist messaging on display in front of all the churches.

        An interesting part about the DOGE audit is that the team consists primarily of young engineers instead of accountants or auditors. Finance is easy for engineers and they know how to mine computer systems to get them to puke up their dirty secrets. They also know how to improve efficiency.

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      2. I always think it’s interesting that churches support the government forcing people to support their causes. They are just undermining the role of voluntary charity – which they should be leading.

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  2. Control of the federal budget and deficit is a combination of spending and revenues.

    On the subject of Social Security I am an originalist and look beck at the original intent as a welfare program to keep the elderly out of poverty.

    The average social security recipient who is kept at or just above the poverty level does not earn sufficient income to pay much if any income tax, thus for the lower income people among us, social security income isn’t taxed.

    For people who have planned on a properly funded retirement, social security is one slice of the income pie. Not all personal revenue is subject to the same tax rate.

    We need government revenue to support basic needs. We fund much of it through income tax and I would suggest that above a certain threshold, perhaps $100,000 adjusted gross income that social security be taxed. This lessens the burden on the cost of the program to the federal government while instituting a tax that does not burden those in need.

    Is this a type of means testing? Yes, but I have issues with wealthy people, me being one of them drawing from the welfare department.

    Does it bother me that I as a self-employed consultant who is of social security age that I pay both sides of FICA tax? You bet it does! That is a decent vacation and a real good addition to our grandchildren’s 529 plans.

    I’ve just sat through a week of testimony concerning a lawsuit from a natural death of someone in Project Room Key which was to minimize the spread of Covid, many of the witnesses still live on the street. I also live near a social security office and many who ask directions to the office can barely speak English.

    It is shocking how many people of limited means are in society.

    Sign me

    We need to support the needy but not by too much

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    1. Social Security is already taking care of the needy much more than the wealthy who contribute much more and receive less. Study up on Social Security Bend Points. The gist is that those who ‘contributed’ the least receive a higher percentage payout than those who pay the most.

      At full retirement age, you receive 90% of your average monthly indexed earnings on the first $1,226. You receive 32% on average monthly indexed earnings between $1,227 and $7,391. You receive 15% of indexed monthly earnings over $7,391. Average monthly indexed earnings are calculated using your highest 35 years of inflation adjusted earnings.

      Here is how the Demonrats will ‘save’ Social Security. They will attempt to raise the minimum payout, so those who are already receiving a 90% payout, will receive more. And they will attempt to raise the amount that high earners have to pay. This would lead to bigger distortions in their Ponzi Scheme. Giving more money to those who pay the least will speed up the bankruptcy process.

      I don’t have a problem with massive cuts in the size and spending of the Federal Government. This would be payback to those who robbed the excess contributions that Baby Boomers made through our working careers and spent the money instead of saving or investing it.

      Our Federal Government depends on a financially illiterate populace to keep bilking us. Most of those in our Federal Government fit in financially illiterate category except when it comes to feathering their own nest.

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      1. Agree – The left’s push will basically change SSI from a “trust fund / savings plan” to a welfare program. The costs will increasingly be paid by people who benefit less. Income redistribution is their most popular policy.

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    2. I’ve never thought of the retirement income aspect of SSI as “welfare”. I know there are aspects of SS that provide aid to disabilities and survivor benefits – which definitely are welfare – but the pension aspect of SSI (which is the lion’s share of the spending) provides $ benefits based on the money contributed. It’s often called a “trust fund / savings plan” for workers.

      That said, as I just commented to Klaus, I think it’s inevitable it becomes another welfare program overall. They’ll raise the tax limit on higher income workers and give them less benefits than lower income workers – who will contribute disproportionately less. Everything the government does eventually becomes welfare.

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      1. The rich have always vastly paid more taxes than the average “taxpayer”.

        I always get odd reactions from people when I refer to social security as welfare. That is due to conditioning and brain washing. If it was a savings plan, a beneficiary’s excess funds could pass on at death if there are any. That is not the case which is why I refer to it as welfare.

        on a similar note I remember protests in which people said “government take your hands off my Medicare”. Social Security and Medicare are Social Welfare programs but most can’t admit that there are some parts of socialism that they like. I don’t agree with socialism, I only point it out.

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  3. Here’s an article in Kiplinger’s that discusses several provisions floating through Congress right now to address Social Security.

    Minnesota Re. Angie Craig D-MN has proposed “The You Earned It, You Keep It Act”. The proposal’s gist is that it would end the taxability of Social Security and would also collect 6.5% on incomes above $250,000. Leave to Congress to overlook the fact that higher income rates are already paying higher taxes and those with higher incomes would also be paying those higher taxes on the additional funds withheld for Social Security. This would extend Social Security’s solvency through 2054.

    Sens. Marsha Blackburn R-TN and Roger Marshall R-KS are proposing raising the taxability thresholds to $34,000 for Individuals and $68,000 for Couples.

    I have been watching DOGE’s activities closely during the 24 days we were evacuated from our house and can clearly see that the Federal Government wastes our hard earned tax dollars on really Stupid Spending. The various Federal entities are fighting being audited and becoming transparent. There surely is a lot of fraud in the system. I expect Trump is trying to find cuts in stupid spending and fraud to pay for making Social Security Non-taxable.

    https://www.kiplinger.com/taxes/will-tax-on-social-security-benefits-be-eliminated

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    1. Craig is known as a pretty moderate democrat in a very closely held district of MN. Her proposal is probably pretty sensible, although you are correct that it adds to the progressiveness of the tax structure.

      Most Americans don’t realize that the richest 10% of U.S. households contribute a greater share of income taxes than their counterparts in any other industrialized nation (OECD). They buy the leftist claim that the wealthy don’t pay their “fair share” of taxes, which is complete BS.

      I too have been entertained by the DOGE reports. Although some of the reports are a bit dubious, the idea is creating a burning platform in Washington that will lead to more action & accountability.

      Did you see that DJT tweeted out yesterday “BALANCED BUDGET!!” ….!?! I can’t wait to see the budget proposal as that would be a big accomplishment.

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      1. Sorry, I missed Trump’s Balanced Budget Xweet or whatever tweets are called these days. Balancing the budget is the right thing to do, so we don’t turn a bankrupted country over to our children. His team is operating just like a business or well run household would.

        It is a shame that most of the populace has been conned about the rich not paying their fair share. Trump’s proposed budget is actually hitting a loophole for private equity by ending carried interest.

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  4. This is a great example of the public pillory doing good work. Mayor Karen bASS is a low skill mayor who has never been anything other than a civil serpent.

    President Trump, assigned Ric Grenell to be his point person in LA to assure that none of the Federal Relief Funds are spent stupidly. Ric has already used the public pillory to shame Steve Soboroff, who bASS assigned as her Rebuild LA Czar from taking a $500,000 salary for three months work.

    https://www.breitbart.com/politics/2025/02/09/steve-soboroff-agrees-work-for-free-after-500000-salary-exposed/

    For any who are unfamiliar with what a pillory is. The pillory is a device made of a wooden or metal framework erected on a post, with holes for securing the head and hands, used during the medieval and renaissance periods for punishment by public humiliation and often further physical abuse. The pillory is related to the stocks. A sign was hung on the boards that listed the person’s offense. A pillory is prominently displayed in Colonial Williamsburg, VA.

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    1. Politicians hand out $500K salaries like candy on Halloween. They don’t even think about how tone deaf that looks to real people who have lost everything. Sickening.

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