The Trump administration has made several changes to the Social Security program in the past year. The list includes cutting administrative expenses, increasing the overpayment recovery rate, and implementing a new telecommunications platform meant to reduce fraud and improve customer service.
Additionally, President Trump signed the One, Big, Beautiful Bill Act (OBBBA) into law on July 4. The legislation added a new senior deduction that offsets income tax on Social Security for some beneficiaries aged 65 and older. But the OBBBA did not fulfill Trump's promise to end taxes on Social Security.
However, some lawmakers in Washington still want to make that promise a reality. Some lawmakers also want to change how the Social Security Administration calculates annual cost-of-living adjustments (COLAs). Here's what retirees need to know.
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1. Lawmakers want to eliminate federal income tax on Social Security benefits
President Trump promised to end federal income tax on Social Security, and a White House press release states: "No tax on Social Security is a reality in the One Big Beautiful Bill." But that is a misrepresentation. The legislation merely added another senior deduction that offsets those taxes in certain cases.
However, the deduction does not apply to beneficiaries under age 65, nor does it apply to beneficiaries aged 65 and older if their income exceeds certain levels. The deduction is phased out for single seniors with income over $75,000 and married seniors with income over $150,000. Additionally, the deduction expires for everyone after 2028.
So, several lawmakers have introduced legislation that would actually eliminate taxes on Social Security:
- In 2025, Sen. Ruben Gallego (D-Ariz.) and Rep. Angie Craig (D-Minn.) introduced the "You Earned It, You Keep It Act."
- In 2025, Rep. Thomas Massie (R-Ky.) and Rep. Daniel Webster (R-Fla.) introduced the "Senior Citizens Tax Elimination Act."
Senator Gallego says, "Trump claimed he ended taxes on Social Security. My bill actually does it. Permanently." Similarly, Rep. Massie says, "My bill would exempt Social Security retirement benefits from taxation and boost the retirement income of millions of older Americans."
Both pieces of legislation come with an important drawback. The Social Security Trust Fund -- the account that holds surplus tax revenue to pay future benefits -- is already on pace to be depleted by 2034, at which point benefit cuts would be necessary. Ending taxes on Social Security eliminates a key funding source, which would bring trust fund depletion forward by more than one year, according to the Committee for a Responsible Federal Budget.
2. Lawmakers want to change how Social Security's COLAs are calculated
The Senior Citizens League (TSCL), a nonpartisan senior advocacy group, says that Social Security's COLAs have failed to keep up with inflation because they are calculated incorrectly. "The average senior who retired in 1999 has lost nearly $5,000 in Social Security payments as a result of the government using the wrong price index to calculate cost-of-living adjustments," according to TSCL.
Currently, COLAs are tied to a subset of the Consumer Price Index (CPI) known as the CPI-W, which measures inflation based on the spending habits of hourly workers. But those people spend money differently than Social Security recipients, which makes the CPI-W a poor measure of inflation for that particular segment of the population.
Instead, some policy experts think COLAs should be calculated based on another subset of the Consumer Price Index known as the CPI-E, which measures inflation based on the spending habits of individuals aged 62 and older. In that scenario, TSCL estimates that workers who retired in 2024 would receive an extra $12,000 in lifetime benefits.
Earlier this year, Sen. Richard Blumenthal (D-Conn.) and Rep. Nikki Budzinski (D-Ill.) alongside a dozen cosponsors introduced the "Boosting Benefits and COLAs for Seniors Act." The legislation would change how the Social Security Administration calculates COLAs, replacing the CPI-W with the CPI-E.
Social Security's Office of the Chief Actuary estimates that change would increase COLAs by an average of 0.2 percentage points annually. That means retired workers would see larger pay increases each year. But it also means the Social Security Trust Fund would be depleted more quickly, leaving Congress with less time to find a solution that avoids across-the-board benefit cuts.
