Are seniors getting reduced Social Security or a tax break?

Up to 2 million Americans could see their Social Security payments reduced by 50% in late July as the Social Security Administration (SSA) is cutting payments to recoup the billions of dollars it overpaid to some Americans in recent years.

In April, the SSA announced that it would begin recovering about $72 billion in improper payments made between 2015 and 2022, resulting from either agency errors or the failure of recipients to report income changes that impacted their benefits.

SSA’s 2025 Social Security Trustees Report found that the program cost $1.485 trillion in 2024 but only brought in $1.418 trillion, resulting in a $67 billion deficit for the year.

According to the same report, the Old-Age and Survivors Insurance (OASI) trust fund could be depleted by 2033, at which point Social Security would only be able to pay 77% of its expected benefits.

Although the Trump administration is overseeing recent Social Security changes, the overpayment recovery effort began under former President Joe Biden after the agency conducted a review. In 2023, the SSA said it would withhold 10% of future benefits to recoup overpayments.

But in March 2025, the agency said it would start withholding 100% of benefits until debts were repaid, sparking public outcry. The SSA later scaled that back to 50%, although many retirees say that amount is still too steep.

The withholding is expected to begin with Social Security payments made on or around July 24, 2025.

In relation, Trump has previously promised that his “Big Beautiful Bill” will eliminate income taxes on Social Security benefits, which some 27.4 million people pay each year.

Instead, the Senate’s version of the bill that was passed earlier this week proposes a tax break of up to $6,000 per person instead of eliminating taxes on benefits. It would apply to seniors 65 and older with annual incomes up to $75,000 (or $150,000 for couples), and it would be available whether they itemize or take the standard deduction.

Above those income limits, the deduction would gradually shrink and phase out completely for individuals earning $175,000 or couples earning $250,000 before expiring after 2028.

According to NPR, House Republicans are expected to pass the bill by Friday.