The Real Story on “No Taxes on Social Security, Tips, and Overtime”
You may have seen an email from Social Security or other information making exaggerated claims about the new “Big, Beautiful” law’s effects on taxes and Social Security, tips, or overtime pay. Unfortunately, the reality is different!
Unlike the law’s permanent tax breaks for the richest and for big corporations, the tax changes for Social Security, tips, and overtime pay are TEMPORARY – all three tax changes are set to expire after 2028.
- Social Security: Click here for details from the financial news website Kiplinger on what the new law actually does about taxes and Social Security. The new law does NOT end all federal taxes on Social Security benefits. The nonpartisan Tax Policy Center estimates that about half of all recipients will pay at least some income taxes on their benefits.
- Tips: A study by the Tax Policy Center found that households earning $33,000 or less wouldn’t benefit much from the tips change, since they typically owe little to no federal income tax. Fully 40 percent of U.S. households that report tip income would not see any tax break from the proposal, according to the TPC report.
- Overtime: Click here for the Bipartisan Policy Center’s detailed post about the ways the overtime tax deduction is limited.
And again, under the new Trump budget law, all three of these tax changes will go away after 2028.
To sum up, an economist who served in the Obama White House said Trump’s import taxes (tariffs) will result in effects on a typical household of “about $750 in tax cuts and $2,000 in tariff increases.” And unfortunately, after six months of Trump being in power again, inflation is picking up, especially for “prices of furniture, toys and clothes — items that tend to be sensitive to tariffs,” according to the Wall Street Journal.
Serving you: While I recently announced I will retire from Congress:
- I am serving out the rest of my term, which ends Jan. 3, 2027; and
- My offices in Philadelphia and Washington are remaining OPEN to serve you!
You can read my full statement by clicking here.
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