New tax law moves Social Security depletion closer for millions

A new law quietly shifts Social Security’s clock

A letter from Social Security’s top actuary confirmed what many lawmakers had not publicized: the One Big Beautiful Bill Act will drain the Social Security trust funds faster than expected.

The letter, sent Aug. 5, 2025, by Chief Actuary Karen Glenn to Senate Finance Committee Ranking Member Ron Wyden, found the law adds costs starting this year and moves the depletion date up by months.

Combined fund loses about six months

Before the law passed, the 2025 Trustees Report projected the combined Old-Age and Survivors Insurance and Disability Insurance trust fund would run dry in the third quarter of 2034.

The new law moves that date up to the first quarter of 2034, a shift of about six months. The Trustees’ Report used assumptions set in December 2024, before the law existed, so it did not account for any of these changes.

Retirement fund alone moves up three months

The retirement fund on its own tells a slightly different story. The disability fund is not expected to run out within the 75-year projection window.

Considered alone, the OASI Trust Fund depletion date shifted from the first quarter of 2033 to the fourth quarter of 2032, about three months earlier.

Lawmakers have historically allowed the two funds to share resources, which is why the combined date gets most of the attention.

Tax cuts are the reason funds shrink faster

The law does two things that reduce money flowing into Social Security.

First, it permanently extends the lower income tax rates from the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025.

Second, it creates a temporary deduction of up to $6,000 for taxpayers aged 65 and older, available from 2025 through 2028.

Because taxes on Social Security benefits go directly into the trust funds, lower tax bills for seniors mean less revenue coming in.

The 10-year price tag hits $168.6 billion

Glenn’s letter put a number on the total damage.

Over the 2025 through 2034 window, net increased program costs from the law come to about $168.6 billion. The costs start at around $3.5 billion in 2025 and climb to about $21.6 billion by 2034.

The 75-year actuarial balance also worsened, and by 2099, cumulative increased costs could top $1.1 trillion in present value dollars, according to the SSA Office of the Chief Actuary letter sent to Sen. Wyden on Aug. 5, 2025.

What depletion actually means for your check

Depletion does not mean Social Security shuts down. It means the program can only pay out what it collects from payroll taxes each month.

The 2025 Trustees Report projected the retirement fund could cover about 77% of scheduled benefits after depletion, which translates to an automatic cut of roughly 23% if Congress takes no action before then.

One budget group sees the cuts in dollar terms

The nonpartisan Committee for a Responsible Federal Budget ran its own numbers.

It projected the retirement fund could go insolvent in late 2032 and estimated a benefit cut closer to 24% at that point. For retirees, that math gets personal fast.

A typical dual-income couple retiring at the start of 2033 could face a cut of about $18,100 a year, while a single-earner couple could lose around $13,600 annually, according to a Committee for a Responsible Federal Budget analysis from July 24, 2025.

Social Security was already under pressure

This law did not create the funding problem. The trust funds have run annual deficits since 2021, spending more each year than they take in.

The worker-to-beneficiary ratio has dropped from more than five-to-one in 1960 to below three-to-one today.

The country is also in what researchers call “Peak 65,” a period from 2024 to 2027 when more than 4.1 million Americans turn 65 every year.

A separate law signed in January 2025 added nearly $200 billion to the 10-year shortfall before this bill arrived.

SSA says the law protects seniors

The Social Security Administration pushed back on the grim projections. The agency later added a correction to its press release acknowledging inaccuracies in that claim.

Commissioner Frank Bisignano called the law a historic step forward for America’s seniors, and the agency said it reaffirms President Trump’s promise to protect Social Security.

The SSA also emailed more than 70 million account holders saying the law eliminates federal income taxes on benefits for most beneficiaries

Congress has time, but not much

Glenn’s letter noted these findings will serve as the updated baseline for solvency proposals until the 2026 Trustees Report comes out.

The 2025 Trustees recommended that Congress act soon so changes can phase in gradually across more generations.

Options on the table include raising taxes, adjusting the benefit formula, or changing the full retirement age. Acting earlier spreads the burden more widely, the Trustees said.

What retirees and near-retirees should know now

Current retirees will not see any benefit cuts tomorrow. The trust funds still have reserves projected to last into the early 2030s.

Seniors aged 65 and older may also see lower tax bills thanks to the temporary $6,000 deduction, available through 2028.

But that same tax relief is what reduces revenue to the trust funds and pulls the depletion date closer. If Congress does not act before the funds run out, every beneficiary could face automatic cuts.

This article was created with AI assistance and human editing.

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