Recently, President Donald Trump unveiled a legislation nicknamed the “One Big Beautiful Bill” which proposes Social Security tax cuts for older Americans. Although it seems like a major win for retirees, the Social Security tax breaks introduced could ruin everything, according to Elon Musk.
What the Bill Does
Initially, the bill seemed like a big win for seniors in America. On July 1, the White House released a statement that 88% of seniors who receive Social Security would not pay tax on their benefits under this new law, thanks to $6,000 federal tax deduction. However, the new bill is not as it sounds.
The bill doesn’t add anything new because already, 64% of Social Security recipients pay no taxes on their benefits today. Therefore, the bill is just expanding an existing exemption.
The new deduction phases out for individuals with income above $75,000 and married couples earning over $150,000 and disappears completely for individuals earning over $175,000 and couples earning over $250,000.
The tax break is also temporary and set to run from 2025 to 2028. This means that in 2028, the tax-free group will reduce back to 64%. Lastly, the new bill only impacts federal taxes. It does not affect state taxation of Social Security.
A Popular Promise With a Hidden Price Tag
Although the tax break is good news for many seniors, it is detrimental to the financial stability of Social Security. Currently, the Social Security trust fund is set to run a deficit by 2034, when only 81% of monthly benefits will be payable. The reason for this is that payouts are growing faster than the revenue coming in.
Introducing a tax break is reducing how much is collected from Social Security benefits, and this could accelerate the insolvency of the program. Due to less money coming in, there would be less to support future retirees. Unless new funding sources are found, seniors are likely to receive smaller benefit checks in 2034.
Elon Musk Warns That This Could Ruin Everything
Although Elon Musk is not a lawmaker, he has often weighed in on national issues, and this time, he spoke his mind. In a recent comment on X (formerly Twitter), Musk criticized the bill’s short-term appeal, calling it a “feel-good fix that digs a deeper hole.”
He argued that offering tax breaks while ignoring Social Security’s long-term funding issues is irresponsible, and that planning to cut revenue without a solid solution for the future could have detrimental effects not only for current retirees but for younger American workers who are paying into the system.
Conclusion
The “One Big Beautiful Bill” sounds appealing, especially to older Americans on fixed incomes, but it doesn’t fulfill the promises made by Trump. Additionally, the tax breaks introduced are temporary, until 2028, unless they are extended. The bill could also cause some harm, which could be felt in a few years, considering the looming insolvency of the Social Security trust fund.