GOP Tax Bill Breaks Trump's Social Security Tax Pledge, Still Hits 25 Million Seniors While Elon Musk's Stock Wealth Skirts FICA

During the marathon Ways and Means Committee meeting scrutinizing the new Republican tax bill, Rep. John Larson (D-Conn.) asked Joint Committee on Taxation Chief of Staff Thomas Barthold about key details, focusing on whether the bill lives up to President Donald Trump's promise of no taxes on Social Security.

What Happened: Larson asked how many individuals would still be taxed on their Social Security income after accounting for the new "senior deduction."

Barthold stated that under current law in 2026, approximately 56 million tax units will report Social Security benefits. Of those, 32 million will include the benefits in their adjusted gross income (AGI), and about 27 million will owe some tax.

Under the GOP proposal, approximately 25 million returns would still include Social Security benefits in AGI and owe tax, mainly because of other income sources. Around 24 million would see those benefits surpass the proposed $4,000 senior deduction and still owe tax.

Why It Matters: After receiving these clarifications from Barthold, Larson pointed out that the bill seemingly does not live up to Trump's earlier claims.

"So essentially, this bill doesn’t do as President Trump promised—to eliminate taxes on Social Security—because some seniors will receive no benefit or less than full benefits from the additional senior deduction from this bill", he said.

He then turned to questions of fairness in payroll tax contributions. "Mr. Bartold, at what income amount does someone stop paying FICA [Federal Insurance Contributions Act] contributions to Social Security?" Larson asked. Barthold replied, "For the present year, it’s $176,100."

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Larson continued, "Someone who’s making, let’s say, $2.5 million in annual wages… will they pay FICA throughout the year?" Barthold answered that FICA is halted once the income cap is reached, meaning high earners contribute only up to the threshold.

Larson concluded by asking how much someone like Tesla Inc. CEO Elon Musk—who is anticipated to recive over $50 billion in compensation from Tesla through stock awards rather than a traditional salary—would contribute to Social Security annually. In response, Barthold explained that income from capital gains and stock-based compensation typically isn’t subject to FICA taxes.

The bill, which proposes a major health-care revamp that reduces Medicaid funding by an estimated $880 billion in order to help fund $4.5 trillion in newly proposed and extended tax reductions, has been a source of major controversy since it was introduced. Democrats have called on GOP leaders to discard Medicaid cuts and instead address Medicare Advantage “upcoding” to tackle federal waste.

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