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While Trump framed his initiative as tax relief for retirees, the benefits disproportionately favor higher-income retirees.
So, who would benefit the most from TrumpsSocial Securitytax plan?
How It Currently Works
Social Security benefits are taxed based on income.
Revenue from these taxes helps sustain the Social Security Trust Fund.
Trump wants to stop taxing this income.
Who Benefits?
Trumps plan would primarily benefit high-income retirees.
The benefit from the policy grows with income up to the cap.
Therefore, these higher-income earners will benefit.
Higher-income retirees with revenue from pensions, investments, and part-time work would also gain.
These people would all have higher incomes, though.
The trust fund is hemorrhaging.
Future Financial Risks
Winegarden emphasized the financial risks of Trumps proposal.
Luscombe also said there areCongressional Social Security tax proposalsthat would increase the income threshold for Social Security withholding.
In the long run, it hurts future beneficiaries of all stripes, but particularly lower-income ones.
What Now?
Older adults and future retirees should take proactive steps to secure their financial future.
A reduction in taxable Social Security income might also result in lower Medicare premiums, Matthew said.
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