Trump Says ‘No Tax on Social Security’ — Here’s What His New Law Actually Does
WASHINGTON — President Donald Trump said Wednesday night that his administration delivered sweeping tax relief for workers and seniors, declaring that Congress “wrapped 12 different bills up into one beautiful bill that includes no tax on tips, no tax on overtime and no tax on Social Security for our great seniors.”
But while the newly signed domestic policy law does provide tax breaks tied to tips, overtime and Social Security, the reality is more limited — and temporary — than the president’s claim suggests.
What Trump’s law actually does
The legislation, signed over the summer and promoted by the White House as the “One Big Beautiful Bill,” creates new deductions, not permanent exemptions from taxation.
Key provisions include:
- No tax on tips (temporarily):
Workers may deduct tipped income from 2025 through 2028, capped at $25,000 per year. The benefit phases out for individuals earning more than $150,000 annually. - No tax on overtime (temporarily):
Overtime pay is also deductible from 2025 through 2028, capped at $12,500 per year, with the same income phase-out rules. - Social Security tax relief (partial):
Seniors aged 65 and older qualify for a $6,000 deduction, which phases out for higher-income households and expires in 2028.
The law does not eliminate all taxation on Social Security benefits, nor does it apply universally to everyone receiving benefits.
How many seniors benefit?
According to an analysis from the Council of Economic Advisers, the $6,000 deduction would mean:
- 88% of Social Security beneficiaries over age 65 would owe no federal taxes on their benefits
- That is up from 64% previously
- Still, 12% — more than 7 million seniors over 65 — would continue to pay taxes
The White House has highlighted the improvement as a major win for retirees, arguing the change meaningfully reduces the tax burden on older Americans.
Who is left out
Millions of Social Security recipients do not qualify for the new deduction, including:
- Disabled beneficiaries under age 65
- Survivors, including widows, widowers and children
- Early retirees under 65
Those groups — which make up a significant portion of the Social Security population — receive no new tax relief under the law.
Temporary relief, not permanent repeal
Another major distinction: all three deductions expire after 2028 unless Congress acts to extend them.
That means the law falls short of permanently eliminating taxes on tips, overtime, or Social Security — despite the president’s rhetoric suggesting otherwise.
The bottom line
Trump’s claim that the bill delivers “no tax on Social Security” reflects a partial and time-limited policy, not a full repeal of benefit taxation.
The law does expand tax relief for many seniors and workers, but millions remain excluded, and all provisions are scheduled to sunset within four years — leaving their long-term future uncertain.
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