The 3 Biggest Ways Kamala Harris and Donald Trump’s Social Security Plans Could Hurt Retirees

Millions of Americans will go to the polls on November 5 or vote by mail or in person before then. The two major party presidential candidates — Democratic Vice President Kamala Harris and Republican former President Donald Trump — offer stark contrasts in nearly every area.

Social Security is no exception. The Democratic and Republican presidential candidates have very different views on what needs to change with the federal program. Here are the three biggest ways Harris and Trump’s Social Security plans could affect retirees.

Image source: Getty Images.

1. Trump: No taxes on Social Security benefits

On July 31, 2024, Trump posted in all caps on the social media platform Truth Social: “Seniors should not pay Social Security tax!” He has since repeated the statement at campaign rallies, adding: “And they won’t.”

Not every retiree would be affected if Trump returned to the White House and could follow through on his pledge. About 40 percent of people on Social Security pay federal income taxes on their benefits, according to the Social Security Administration (SSA).

Would Trump’s plan help you? It depends on how you file federal income taxes and your combined income (adjusted gross income plus tax-free interest plus half of your Social Security benefits). Some retirees have to pay federal taxes on up to 50% of their benefits, while others who make more money have to pay taxes on up to 85% of their benefits.

The idea of ​​exempting Social Security benefits from federal income taxes is not new. Until 1984, no one had to pay federal taxes on Social Security benefits.

2. Harris: Different method of calculating COLA

Harris has pledged to “protect and expand” Social Security, but has yet to provide detailed plans for the program. However, as a US senator, she co-sponsored the Social Security Expansion Act.

That legislation proposed some major changes that wouldn’t affect retirees, including raising the payroll tax cap for high-income workers to boost Social Security revenue. It also included expanding retirement benefits for low-income workers.

An important part of the Social Security Expansion Act, which would impact every retiree receiving Social Security, was the proposal to change the way cost of living adjustments (COLAs) are calculated. The bill would adopt the Consumer Price Index for the Elderly (CPI-E), which supporters argue more accurately reflects the expenses of the elderly than the current measure of inflation used to determine Social Security COLAs.

The Congressional Research Service conducted an analysis to see how using the CPI-E might impact the Social Security COLA. It found that a hypothetical COLA using this measure would have resulted in Social Security increases of the same size or larger in all but six years since 1986.

3. Harris and Trump: The impact when Social Security runs out of money

There is a common denominator between Harris and Trump’s ideas about Social Security: Both would hurt when the program runs out of money. The combined Social Security trust fund reserve will be depleted in 2035 if nothing is done, based on the 2024 Social Security trust report. But some changes could speed up that timeline, while others could slow it down.

Currently, federal income taxes paid on Social Security benefits provide about 4 percent of the program’s funding. The 1984 change to tax benefits was made as part of several major reforms designed to prevent Social Security trust funds from running out of money.

The Committee for a Responsible Federal Budget (CFRB) estimates that Trump’s proposal to eliminate federal income taxes on Social Security benefits would advance the insolvency date for Social Security by a year. The CFRB also concluded that the amendment would increase the Medicare Hospital Insurance Trust Fund’s insolvency date by six years to 2030.

What about the alternative COLA calculation method advocated by Harris? It would also increase Social Security’s costs and therefore deplete the program’s combined trust funds somewhat sooner. However, raising the payroll tax cap (which Harris supported as a senator and vice president) and other revenue-raising measures previously supported by Harris would stretch Social Security’s solvency for decades.

Political reality

Presidential candidates sometimes make campaign promises they can’t keep. The political reality is that the president can’t change Social Security unilaterally — both houses of the US Congress must first pass legislation to reform the program.

So whether or not any of the Social Security proposals supported by Harris or Trump affect retirees depends on what members of Congress want to do. Down-ballot races are also important for retirees.