Donald Trump promised to end federal taxes on Social Security retirement benefits during the presidential campaign. This is not something he can do unilaterally. White House Press Secretary Karoline Leavitt told reporters that the president and Republican lawmakers have discussed the move, including the move.
But so far, President Trump has made some changes on his own, directly or indirectly affecting social security. Here are four things you should know.
Image source: Official White House Photos taken by Shealah Craighead.
One of Trump’s first day of his return to the White House could impact the operational aspects of Social Security. He appointed several acting cabinet members and department heads, including the selection of Michelle King as the acting commissioner for the Social Security Agency (SSA).
King has a wide background in SSA. She joined the institution in 1994 as a representative of the bilingual proposition. Over the years, she moved to a higher position. Before being appointed as acting specialist, she served as deputy operation specialist.
President Trump says Tesla Elon Musk, CEO of the Department for Government Efficiency (DOGE), is a temporary organization that aims to determine ways to reduce federal spending. Musk and Moral have already had a lot of news on their efforts to cut government costs. They are now targeting Social Security.
Musk recently posted on X, which he used to be Twitter’s social media site X, and he believes that entitlement plans, including social security, are significant fraud. He also claims that more than $100 billion in payments per year are paid to individuals without a Social Security number.
Musk believes that Doch’s goal is to cut $2 trillion from federal spending. It will be very difficult to achieve this without cutting social security benefits.
However, Doge’s efforts are focused on administrative efficiency and productivity. Any cuts to Social Security benefits must pass Congress and signed into law by President Trump.
Social Security Cost of Living Adjustment (COLA) is based on inflation. So, anything President Trump does will lead to an increase or decrease in inflation, which may ultimately affect future Coke.
Shortly after Trump opened on January 20, 2025, Trump ordered heads of all federal departments and agencies to “provide emergency price relief to the American people in line with applicable laws and increase the prosperity of American workers.”
However, reducing inflation is easier said than done. It remains to be seen what steps federal officials will move towards the needle with inflation and ultimately affect Social Security Coke.
Other actions taken by Trump could lead to higher inflation. In particular, he imposes a 25% tariff on all steel and aluminum imports in the United States and a 10% tariff on most products imported from China.
He also threatened to import most imports from Canada and Mexico, but temporarily suspended their implementation. Many economists believe these tariffs will lead to higher inflation rates, which may lead to higher social security Coke.
The president has issued several executive orders related to immigration enforcement. Will these actions affect social security? Maybe.
Major immigration crackdowns will have the potential to reduce labor supply in certain industries. This may result in higher prices for certain products and services, resulting in inflation affecting Social Security Coke.
Trump’s immigration policy may also accelerate the timeline for when the program’s trust funds will run out, which is currently expected to take place in 2035. A study conducted last year by the Institute of Nonpartisan Taxation and Economic Policy found that undocumented immigrants paid $25.7 billion in federal FICA taxes to fund Social Security.
Financial news website business insiders recently reported that SSA estimated that the president’s massive eviction program could reduce Social Security funds by about $20 billion a year.
The plan could run out of money faster if President Trump terminates the federal tax on Social Security retirement benefits, overtime and prompts for federal taxes. The nonpartisan committee of the nonpartisan federal budget estimates that these and other recommendations Trump made as presidential candidate will push Social Security three years earlier than currently expected.
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Keith Speights has no position in any of the stocks mentioned. Motley Fool has a place and recommends Tesla. Motley Fool has a disclosure policy.
