During his presidential campaign, Donald Trump promised to end federal taxation of Social Security retirement benefits. This isn't something he can do unilaterally. White House press secretary Karoline Leavitt told reporters that the president and Republican lawmakers have discussed including this move in a budget package.
But so far in his second term, President Trump has made some changes on his own that affect Social Security either directly or indirectly. Here are four things you should know.
Image source: Official White House photo by Shealah Craighead.
1. An experienced acting commissioner is now in charge
One of Trump's actions on the first day of his return to the White House could affect the operational aspects of Social Security. He named multiple acting cabinet members and department heads, including selecting Michelle King as the acting commissioner of the Social Security Administration (SSA).
King has an extensive background at the SSA. She joined the agency in 1994 as a bilingual claims representative. Through the years, she moved into higher positions. Before being named acting commissioner, she was the deputy commissioner for operations.
2. DOGE is targeting Social Security
President Trump put Tesla CEO Elon Musk in charge of the Department of Government Efficiency (DOGE), a temporary organization set up to identify ways to reduce federal spending. Musk and DOGE have been in the news quite a bit with their efforts to cut government costs. They're now targeting Social Security.
Musk recently posted on X, the social media site he owns that was formerly Twitter, that he believes there's significant fraud in entitlement programs, including Social Security. He also claimed that over $100 billion annually is paid to individuals with no Social Security number.
At this point, I am 100% certain that the magnitude of the fraud in federal entitlements (Social Security, Medicare, Medicaid, Welfare, Disability, etc) exceeds the combined sum of every private scam you've ever heard by FAR.
-- Elon Musk (@elonmusk) February 11, 2025
It's not even close.
DOGE's goal, according to Musk, is to slash $2 trillion from federal spending. Achieving this objective without cutting Social Security benefits would be extraordinarily difficult.
However, DOGE's efforts are focused primarily on administrative efficiency and productivity. Any Social Security benefit cuts would have to pass Congress and be signed into law by President Trump.
3. Inflation declarations could affect COLAs
Social Security cost-of-living adjustments (COLAs) are based on inflation. Therefore, anything President Trump does that causes inflation to increase or decrease could ultimately affect future COLAs.
Soon after his inauguration on Jan. 20, 2025, Trump ordered the heads of all federal departments and agencies "to deliver emergency price relief, consistent with applicable law, to the American people and increase the prosperity of the American worker."
But bringing down inflation is easier said than done. It remains to be seen which steps by federal officials will move the needle with inflation and ultimately affect Social Security COLAs.
Other moves made by Trump might cause inflation to rise. In particular, he has placed 25% tariffs on all steel and aluminum imports to the U.S. and 10% tariffs on most products imported from China.
He has also threatened 25% tariffs on most imports from Canada and Mexico but temporarily paused their implementation. Many economists think these tariffs will cause inflation to rise, which could lead to higher Social Security COLAs.
4. The immigration crackdown might accelerate Social Security trust funds' drawdowns
The president issued several executive orders related to immigration enforcement. Could these actions affect Social Security? Perhaps.
A significant immigration crackdown would potentially reduce labor supply in some industries. This could lead to higher prices for some products and services, with the resulting inflation affecting Social Security COLAs.
Trump's immigration policies might also accelerate the timeline for when the program's trust funds are depleted, which is currently projected to happen in 2035. A study last year by the nonpartisan Institute on Taxation and Economic Policy found that undocumented immigrants paid $25.7 billion in federal FICA taxes that fund Social Security.
The financial news website Business Insider recently reported that the SSA estimates the president's plans for mass deportations could reduce Social Security funding by around $20 billion per year.
Should President Trump get his way on ending federal taxes on Social Security retirement benefits, overtime, and tips, the program could run out of money even sooner. The nonpartisan Committee for a Responsible Federal Budget estimates that these and other proposals made by Trump as a presidential candidate would cause Social Security to become insolvent three years earlier than currently expected.
