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By Suzanne Blake
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President Donald Trump's signature tax legislation is projected to worsen Social Security's financial outlook, according to government estimates.
The law could worsen Social Security's finances by nearly $169 billion over a decade, according to an August 2025 letter from Karen Glenn, the Social Security Administration's (SSA) chief actuary, to Senator Ron Wyden (D-Ore.).
The latest government projections show that the Old-Age and Survivors Insurance (OASI) Trust Fund is expected to exhaust its reserves in the fourth quarter of 2032, one quarter earlier than previously forecast.
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"One thing I said and I gave my word; we're not going to hurt anybody on Medicaid, Medicare or Social Security," Trump said in August last year, adding that "we're doing great on Social Security" and "we're going to protect it."
The latest Social Security Trustees Report, released in June, projects that the OASI fund will exhaust its reserves in the fourth quarter of 2032, one quarter earlier than forecast in the previous year's report. At that point, continuing revenue would cover only 78 percent of scheduled benefits unless Congress acts.
Newsweek reached out to the White House for comment via email.
Why It Matters
Social Security's financial problems predate Trump's legislation, but the One Big Beautiful Bill Act (OBBBA) reduced a source of revenue at a time when the program was already rapidly approaching depletion of its retirement trust fund.
In a June analysis, the Committee for a Responsible Federal Budget (CRFB) modeled a 24 percent benefit reduction, estimating that it would lower the average monthly payment by about $500.
By comparison, the 2026 Trustees Report projects that continuing income would cover 78 percent of scheduled OASI benefits when the fund's reserves are exhausted, implying a 22 percent shortfall.
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How Trump's Tax Law Affected Social Security
Trump signed the One Big Beautiful Bill Act into law on July 4, 2025. The legislation made permanent the lower individual income-tax rates and adjusted tax brackets introduced by the 2017 Tax Cuts and Jobs Act, while also changing certain standard and itemized deductions.
Those tax provisions have an indirect consequence for Social Security.
“For a retiree, paying less in taxes is good news. Nobody's complaining about keeping more of their money,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek. “But the bigger question is who's making up the difference? Well, right now, nobody is.”
Some beneficiaries pay federal income taxes on their Social Security benefits, and revenue generated by that taxation goes into the Social Security and Medicare trust funds. Because the OBBBA decreases beneficiaries' overall income-tax liability, the Social Security actuary projected that the trust funds would receive less revenue from the taxation of benefits beginning in 2025.
In an August 5, 2025 letter to Senator Ron Wyden, Chief Actuary Karen Glenn wrote: “Over calendar years 2025 through 2034, the total net increase in OASDI program cost is estimated to be $168.6 billion.”
In her August 2025 analysis, Glenn also estimated that the law would worsen Social Security's projected 75-year actuarial balance by 0.16 percentage points of taxable payroll, moving it from a deficit of 3.82 percent under the 2025 Trustees Report baseline to 3.98 percent following implementation of the legislation.
Most significantly for beneficiaries, Glenn estimated that the OASI fund would exhaust its reserves in the fourth quarter of 2032 rather than the first quarter of 2033 because of the legislation.
“I think what's particularly troubling is that retirees hear two completely different messages,” Ryan said. “They're told Social Security is being protected, but the numbers show its finances getting weaker. The tax relief is real. So is the additional funding shortfall.”
A Year Later, How Accurate Was the Warning?
Glenn's August 2025 letter projected that the OBBBA, considered by itself against the 2025 Trustees Report baseline, would move OASI depletion from the first quarter of 2033 to the fourth quarter of 2032.
The 2026 Trustees Report subsequently projected that OASI reserves would be depleted in the fourth quarter of 2032, at which point incoming revenue would cover 78 percent of scheduled benefits. Although the projection followed the implementation of Trump's tax legislation, other factors also contributed to the change in outlook.
The latest trustees' calculations incorporate other changes, including reducing their assumed long-term fertility rate from 1.90 to 1.75 children per woman and lowering immigration assumptions.
“Trump didn't create Social Security's funding problem. That problem has been building for decades,” Ryan said. “But his tax law made it worse, and that's especially difficult to reconcile with his promise to protect the program.”
Although Glenn estimated in 2025 that the legislation would bring the hypothetical combined OASI and Disability Insurance trust fund depletion date forward from the third quarter of 2034 to the first quarter of 2034, the 2026 Trustees Report retained the previous projection of the third quarter of 2034. The two trust funds are legally separate and cannot be combined without legislative action.
How Much Could Social Security Benefits Fall?
The latest trustees' estimates show that beneficiaries would not suddenly stop receiving benefits when the retirement trust fund exhausts its reserves.
Instead, continuing income would cover 78 percent of scheduled OASI benefits. That means a cut of roughly 22 percent of scheduled payments.
“The tax cuts are bringing in less revenue to fund coffers, which forces any shortfalls to be funded by government budget increases,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. “I don’t believe the current administration has a true plan to fund social security at this time outside the belief there is some material abuse in the system meant to offset outflows. Most of the promises were political rhetoric for voting purposes.”
The consequences would also vary considerably based on the size and age of each state's population. CRFB estimated annual benefit losses of $33.4 billion in California, $26.6 billion in Florida, $23.7 billion in Texas and $19.7 billion in New York under its scenario.
Overall, about 60.1 million people, or 17.7 percent of the U.S. population, would be affected if CRFB's modeled cut were imposed on today's beneficiary population.
“The combined net effect of these income tax provisions results in less overall tax liability for Social Security beneficiaries,” Glenn wrote in her August letter. “In turn, the trust funds will receive lower levels of projected revenue from income taxation of Social Security benefits for all years beginning in 2025.”
What Happens Next
Congress has roughly six years before the retirement trust fund is projected to exhaust its reserves.
The 2026 Trustees Report projects that OASI can continue paying 100 percent of scheduled benefits until the fourth quarter of 2032. At that point, incoming revenue would then cover 78 percent of scheduled benefits.
“Congress can still prevent the projected cuts. But the longer lawmakers wait, the fewer painless options they'll have,” Ryan said. “Someone eventually has to explain how we're going to pay for the promises we've already made.”
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.
Contact Newsweek editors on this story: Jason Lemon and Rhian Morgan.
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