Trump tax law cuts Social Security revenue and moves up trust fund depletion, report says

President Donald Trump's signature tax law is projected to weaken Social Security's finances, according to government estimates that Newsweek reported on Wednesday ¹. The law is the One Big Beautiful Bill Act, which Trump signed on July 4, 2025 ¹.

In an August 5, 2025 letter to Sen. Ron Wyden, a Democrat from Oregon, Social Security Chief Actuary Karen Glenn estimated the law would raise program costs by $168.6 billion over calendar years 2025 through 2034 ¹². Wyden had asked her to explain how the law would affect the trust funds ².

Why the tax law matters to Social Security

Some beneficiaries pay federal income tax on their Social Security benefits, and that money flows into the Social Security and Medicare trust funds ¹. The law lowers many people's overall income-tax bills, so the trust funds receive less of that money starting in 2025 ¹.

Glenn wrote that the law's income tax provisions result in "less overall tax liability for Social Security beneficiaries." She added that the trust funds will therefore receive lower projected revenue from taxing benefits ¹².

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Her letter said the law alone would move the retirement fund's depletion date from the first quarter of 2033 to the fourth quarter of 2032 ¹. It also would widen the 75-year shortfall from 3.82 percent of taxable payroll to 3.98 percent ¹.

What the latest trustees report says

The latest Social Security Trustees Report, released in June, projects that the retirement trust fund, formally Old-Age and Survivors Insurance (OASI), will run out of reserves in the fourth quarter of 2032. That is one quarter earlier than last year's forecast ¹.

At that point, incoming payroll tax revenue would cover only 78 percent of scheduled benefits unless Congress acts. That implies a cut of roughly 22 percent ¹. Benefits would not stop suddenly ¹.

The tax law is not the only factor. The trustees also lowered their long-term birth-rate assumption from 1.90 to 1.75 children per woman and lowered their immigration assumptions ¹. Social Security's money problems also predate Trump's law ¹.

The Committee for a Responsible Federal Budget, a budget watchdog group, modeled a 24 percent benefit cut. It estimated the cut would lower the average monthly payment by about $500 and affect about 60.1 million people ¹.

The promise and the numbers

That matters because Trump's pledge and the actuary's estimates point in different directions. Finance expert Michael Ryan told Newsweek that retirees hear two messages: that the program is protected, and that its finances are weakening ¹.

Ryan also said Trump did not create the funding problem but that his tax law "made it worse" ¹. Newsweek said it asked the White House for comment ¹.

Congress has roughly six years before the retirement fund is projected to run short ¹. Ryan warned that "the longer lawmakers wait, the fewer painless options they'll have" ¹.

The Record

1. Jul 4, 2025Trump signs the One Big Beautiful Bill Act into law ¹.
2. Aug 5, 2025Chief Actuary Karen Glenn tells Sen. Ron Wyden the law raises Social Security costs by $168.6 billion over 2025-2034 ¹².
3. Jun 1, 2026The latest Trustees Report, released in June, projects the retirement fund will run out of reserves in the fourth quarter of 2032 ¹.

Sources

1. Newsweek, “Trump's Signature Legislation Fast-tracked Social Security Crisis: Report” (2026-10-28). newsweek.com/trump-tax-law-worsened-social-security-outlook-
2. Straight Arrow News, “Social Security funds will deplete earlier than expected, chief actuary warns” (2025-08-07). san.com/cc/social-security-funds-will-deplete-earlier-than-e

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