US President Donald Trump has issued a warning: if Congress does not pass his tax and spending bill, Americans would face much higher taxes. The budget bill, which has received strong opposition from Democrats, faith leaders, and social service advocates, faces a difficult path in the Senate, where even some Republicans have expressed concern about the magnitude of the cuts, particularly to Medicaid services and SNAP benefits, which would disproportionately affect the most vulnerable Americans.
Academics and scientists have also criticized possible reductions in research spending in the budget package, which would add trillions of dollars to the national debt. However, independent evaluations of the the bill, which would prolong the 2017 tax cuts that are set to expire later this year, discovered that Trump’s estimate is around ten times more than the predicted rise if the cuts expire.
Budget Bill Spurs Debate
The argument over President Donald Trump’s so-called “big, beautiful bill” has become nasty. The bill has passed the GOP-controlled House and is now in the Senate, where Republicans are divided over how to balance opposing interests.
They want to continue and increase President Trump’s tax cuts, which disproportionately benefit the wealthy and come at a high cost, as well as strengthen immigration enforcement and defense funding. However, others are hesitant to do so when the national debt grows by nearly $2.6 trillion and Medicaid benefits are reduced.
Taxes will increase for all income groups if the bill fails, but not by the 68%
The Tax Foundation, a center-right organization, has not created an estimate, but it has made similar estimates to TPC, according to Garrett Watson, the Tax Foundation’s policy analysis director. According to Watson, the 68% number is far higher than projections from respected experts. Tax experts believe Trump’s 68 percent claim might be a confusing reference to a another statistic.
According to the Tax Policy Center, if the law expires, little more than 64% of taxpayers will face higher taxes. The proportion fluctuates according to the household income. Many low-income households will experience no change, mostly because they do not earn enough to pay federal income taxes, however, those earning $67,000 or more are around 80 percent certain to face a tax rise.
If the bill is not renewed, around 62% of taxpayers will face tax increases
Similarly, the Tax Foundation estimated that if the 2017 law expired, 62 percent of taxpayers would face higher taxes. None of this, however, implies that the average taxpayer’s rise would be greater than 60% when compared to the previous year’s tax bill.
According to the Tax Policy Center, the Republican tax package largely lowers taxes for lower and middle-income groups while mostly benefiting richer individuals. If the Republican bill succeeds, individuals earning $34,600 or less would receive a 0.6% gain in after-tax income, while those making $67,000 or more would enjoy a 2.8% boost.
What about taxes on Social Security benefits?
The tax provisions of H.R. 1, the One Big Beautiful Bill Act enacted by the House, include renewals of expiring Tax Cuts and Jobs Act (TCJA) provisions as well as new tax cuts. The J.C on Taxation estimates that the tax title will increase government deficits by $3.8 trillion.
The bill’s new tax benefits include no tip tax, no overtime tax, no tax on vehicle loan interest, and, as explained below, an extra deduction for seniors. During the 2024 presidential campaign, President Trump made headlines by advocating the elimination of income taxes on Social Security payments, something Democrats and Republicans had both advocated for in previous years.
However, bills like H.R. 1 that lawmakers want to approve through the budget reconciliation process cannot include Social Security provisions, hampering efforts to remove taxes on Social Security payments under current legislation.
Furthermore, abolishing taxes on Social Security payments would be far more expensive than the additional $4,000 deduction in H.R. 1, costing $1.4 trillion over ten years. (Even abolishing taxes on benefits exclusively from 2025 to 2028, which corresponds to the duration of the H.R. 1 deduction, would cost multiple times more than that provision’s $66 billion cost.)
The calculation of taxes on Social Security payouts is difficult, for beginners it is based on a measure of income known as provisional income, which is equal to adjusted gross income (AGI) plus otherwise tax-free interest plus some income that is particularly exempt from federal income taxes plus 50% of Social Security payments.
- No federal income tax is levied on Social Security payments for single filers with provisional incomes below $25,000 (joint filers with provisional incomes below $32,000).
- For single filers with provisional incomes ranging from $25,000 to $34,000 ($32,000 to $44,000 for joint filers), up to 50% of Social Security payments are taxed federally.
- For single filers with provisional incomes over $34,000 ($44,000 for joint filers), up to 85% of Social Security payments are taxed at the federal level.
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