Social Security Administration Gets Political

July 4, 2025 – In an unusual email that appears to have been sent to all Social Security beneficiaries, the Social Security Administration touted the “Big Beautiful Bill” just signed into law. While every administration always tries to shine the brightest lights on its goings on, this bulletin seemed to hit a new low with the headline: “Social Security Applauds Passage of Legislation Providing Historic Tax Relief for Seniors’. It called it “a landmark piece of legislation”.

The email went to say this “This is a historic step forward for America’s seniors,” said Social Security Commissioner Frank Bisignano. “For nearly 90 years, Social Security has been a cornerstone of economic security for older Americans. By significantly reducing the tax burden on benefits, this legislation reaffirms President Trump’s promise to protect Social Security and helps ensure that seniors can better enjoy the retirement they’ve earned.”

About half of recipients paid no tax previously

Before the bill was signed an annual average of about 56 percent of beneficiary families owed federal income tax on their benefits, according to the SSA. Relief now goes into effect for individuals earning more than $25,000 per year and $32,000 for couples (those earning less did not owe any taxes, those earning more than that paid taxes on up to 85% of their benefits). The deduction now fully phases out for single filers with $175,000 in income and joint filers with $250,000, according to the Tax Foundation. The new law also features a “Senior Bonus” deduction of up to $6,000 for folks over 65 with incomes up to $150,000 (singles) and $300,000 (couples), where it starts to phase out.

Trust Funds Run Out of Money Sooner

What the SSA failed to mention is that since taxes paid on Social Security benefits go directly the SS Trust Funds, these new deductions hasten the date when its retirement Trust Fund runs out of money from 2033 to 2032. The Medicare Trust Fund exhaustion date jumps to 2030 from 2036, according to the CRFB.

Bottom line: While the new law will undoubtedly please many taxpayers with higher incomes, it makes the impending crisis in Social Security worse by speeding up the date when its Trust Funds run out of money. A much more responsible approach would have been doing something that would shore up the Trust Funds, like increasing the percentage paid by employees and employers on their earnings. And, perhaps more effectively, tax all earnings instead of capping them at certain levels.