https://www.msn.com/en-us/money/news/trump-claims-bill-eliminates-taxes-on-social-security-here-s-why-that-s-false/ar-AA1HZAIH
How Does The Senior Tax Credit In Trump’s Bill Work?
The tax credit in Trump’s policy bill applies specifically to taxpayers who turned 65 during that tax year or are older, and who have a Social Security number. Those taxpayers are given a $6,000 tax credit per year through 2028 if they make $75,000 or less after other tax deductions, or $150,000 in the case of married couples filing jointly. For those earning more than $75,000 annually, the $6,000 tax credit goes down by 6% of whatever the taxpayer earns above $75,000, or $150,000 filing jointly. That means if someone earns $100,000 after other deductions, for instance, they would subtract 6% of $25,000 ($1,500) from their $6,000 tax credit. That math means no one who earns more than $175,000 annually, or $250,000 filing jointly, will receive the deduction.
Can Trump Still Get Rid Of Taxes On Social Security Payments?
Trump has promised to eliminate taxes on Social Security benefits since before the election, but in order to do so he would have to get 60 votes in the Senate, which is unlikely given Republicans’ narrow majority. Trump’s proposal to eliminate Social Security taxes has been controversial, as experts predict it would make Social Security run out of money faster. The nonpartisan Committee for a Responsible Federal Budget (CRFB) projected in 2024 that exempting taxes on benefits would result in Social Security and Medicare receiving $1.6 trillion less in revenue between 2026 and 2035 than if the current rules stayed in place. That would cause Social Security to become insolvent in 2032, followed by Medicare in 2030—one and six years sooner than currently projected, respectively.
How Will Trump’s Policy Bill Impact Social Security?
The spending bill’s provisions will still speed up Social Security’s insolvency, the CRFB projects, even though it doesn’t affect Social Security directly. The legislation will make Social Security and Medicare run out of money in 2032, one year sooner than had previously been projected, the CRFB predicts, based on other tax cuts in the bill that reduce the amount of revenue that’s used to fund Social Security and Medicare.
As I understand it, the $6,000/$12,000 tax credit doesn't come out of the SS system, but will raise the federal debt, and interest on the federal debt..
But many other provisions in the Big Ugly Bill ... well dammit, I don't understand. I was thinking that some provisions in the BUB reduce income subject to payroll taxes (payroll taxes go into SS and Medicare), but I don't know what those are. A simple tax break does not reduce payroll taxes. Later: the BUB reduces / eliminates income taxes on tips and overtime, and maybe payroll taxes on those too? But that would affect SS, so how is that allowed based on what this and previous articles have said.
The article talks about the $6,000/$12,000 tax CREDIT. I thought it was a tax DEDUCTION, a very different animal. The SSA email in #6 says an "enhanced deduction", and the NBC article in #7 says "deduction". Now I'm really f'ing confused, so I'll just stop here. Its like I'm trying to make sense of emails and articles that were probably written in large part by AI, and don't clarify, but their job is just to write some blah blah that gets clicks.
While I'm at it -- if it is a deduction, is it an "above the line" deduction, i.e. you still get to deduct it and it will reduce your taxable income and taxes, even if you don't itemize deductions, i.e. even if you take the standard deduction?
Or is it like a regular deduction that, along with other regular deductions, must in total exceed the standard deduction threshold in order to benefit you taxwise (otherwise you are just better off taking the standard deduction as 90% IIRC of filers do).
If it's a tax credit, is it what they call "refundable", meaning that even if your income tax overall is zero or gets reduced to zero by the credit, you still get the remaining credit mailed to you as a check or deposit, i.e. like a negative income tax.).
Or non-refundable, meaning if your overall income tax is zero or get reduced to zero by the credit, then that's it, you get no further benefit from it.
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