Would You Pay More Taxes to Save Social Security?

(Image credit: Getty Images)

published 8 April 2025

This year, many are receiving Social Security checks with a modest 2.5% cost-of-living adjustment. However, some individuals are experiencing significantly increased benefits due to the Social Security Fairness Act. At the same time, Elon Musk and Trump's Department of Government Efficiency (DOGE) are leading efforts to make substantial cuts to the Social Security Administration.

Despite these challenges, an interesting trend persists: many people seem willing to pay more to ensure Social Security’s long-term stability.

A survey by the National Academy of Social Insurance (NASI), AARP, the National Institute on Retirement Security, and the U.S. Chamber of Commerce finds that 85% of respondents favor maintaining or increasing Social Security benefits — even if it means raising taxes.

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Notably, that sentiment crossed political lines. About 3 in 4 Republicans, 9 in 10 Democrats, and 8 in 10 independents support the approach.

This willingness to contribute more through taxes may be related to concerns about the future of Social Security.

A 2024 Gallup poll revealed that 87% of U.S. adults are worried about the program, with 43% expressing "a great deal" of concern.
Additionally, a Bankrate survey found that 73% of Americans fear that promised Social Security benefits won't be available to them upon reaching retirement age.

The worry is understandable. The latest projections from the Social Security Board of Trustees show that the combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds are expected to be depleted by 2035.

At that point, the program could only pay 83% of scheduled benefits, relying solely on incoming payroll taxes.

Additionally, under the Trump administration, the Social Security Administration faces significant workforce and resource cuts, which many say will harm the agency’s ability to serve more than 60 million people who receive benefits.

So, will you have to pay more taxes to save Social Security? Or are there other options on the table? Here’s what you need to know.

The debate over Social Security continues. For example, since President Trump returned to the White House for his second term, there has been considerable discussion about possibly eliminating taxes on Social Security benefits.

However, that idea isn’t new; Republican and Democratic proposals to end or reduce these taxes for retirees have existed for some time. And while no federal taxes on Social Security income may seem appealing to many, as reported by Kiplinger, some experts caution that eliminating the taxes could ultimately harm the program's solvency.

So, what should Congress do to ensure that Social Security is around for future generations?

One idea involves raising the payroll tax rate.

Payroll tax rate increase

Currently, employees and employers each pay 6.2% toward Social Security. A suggested increase would bring that rate to 7.2%, according to a NASI report. That change and other adjustments could close Social Security's funding gap and result in a small surplus.

A related approach proposed by the Brookings Institution would ensure long-term solvency through revenue enhancements and benefit adjustments. Key elements include:

Gradually raising the payroll tax rate from 12.4% to 12.6%
Increasing the taxable wage base to cover 90% of total wages by 2039
Modifying rules for pass-through businesses to prevent tax avoidance

Proponents argue this approach is fairer than cutting benefits, while some critics say it could burden workers and small businesses.

Another idea for addressing a Social Security shortfall involves the tax limit (also called the "wage base" or "wage cap."

Social Security tax is withheld from each paycheck, but stops once income reaches a certain amount. That’s due to the Social Security tax limit, which is the maximum amount of earnings subject to Social Security tax.

For 2025, the Social Security wage base is $176,100. So, earnings above that amount aren’t taxed for the program.

Some propose eliminating or raising the tax limit to address funding shortfalls.
Removing the limit could generate trillions over a decade by taxing high earners on all income.
Partial adjustments (e.g., taxing wages over $250,000) could offer a compromise.

Advocates argue this would make the system fairer because top earners currently pay a smaller percentage of their income.

An often-cited example is how quickly wealthy individuals, including billionaires, finish paying their Social Security taxes.

For instance, if you consider just gross annual wage, CNBC explains that Elon Musk would meet the $176,100 tax limit within minutes of the start of 2025. (Reporting indicates that many millionaires earning wages would meet the cap by early March.)

Still, critics of wage cap changes counter that unlimited taxes without corresponding benefit increases weaken the program’s contributory principle and could reduce work incentives.

Meanwhile, some think it doesn't make sense for wealthy individuals to receive Social Security benefits. The argument is that limiting benefits for the rich could help ensure that those who need it get more support.

Others believe that if only some people receive Social Security benefits, everyone might lose interest in supporting the program.

Recently, economist and NYU Stern professor Scott Galloway suggested that wealthy individuals like himself should not receive Social Security benefits.

Data show that the average person receiving Social Security in 2025 receives about $1,976 monthly from the program. The Motley Fool finds that a billionaire who earns wages could conceivably receive the maximum monthly benefit: $51,08 this year, if that billionaire were to retire at 70.

The Street reports that Galloway sees the current system as unfair because high earners don't pay taxes on all their income, yet still get benefits. Galloway argues that the system would be fairer and more effective if those benefits were redirected to those who truly need them. That belief reflects growing concern about ensuring that Social Security works for everyone, including future generations.

Other Social Security reform proposals coming out of the Republican-led Congress:

Some lawmakers have proposed gradually raising the retirement age for claiming full benefits to 69. Such a change would reduce lifetime payouts by thousands of dollars annually. But it’s unpopular with retirees and faces strong opposition from those who argue it would force many people to work longer for less money.
Meanwhile, other lawmakers oppose payroll tax rate increases or expanded wage base limits, preferring to focus on cutting program costs. Critics argue that those moves won’t effectively address insolvency concerns.

On that note, DOGE, led by Elon Musk of Tesla and SpaceX, has already implemented workforce reductions (the plan is to cut 50% of staff) and closed Social Security offices, raising concerns about the quality of service and accessibility for beneficiaries.

According to projections from the Urban Institute, if the Social Security trust fund were depleted, the number of beneficiaries who would subsequently fall into poverty could rise by over 50%.

That estimate highlights the critical role that Social Security plays in providing financial security for millions of retirees who rely on these benefits for their basic needs.

The NASI report indicates that more than 8 in 10 respondents who had not received benefits still described Social Security as "important" or "very important."

Meanwhile, billionaire Musk has referred to Social Security as "the biggest Ponzi scheme of all time" during a February interview on The Joe Rogan Experience podcast. He made that remark during a discussion about government obligations and financial sustainability.

Speaking of Musk and DOGE, a recent report from Sen. Bernie Sanders (I-Vt.) warns that Musk's proposed staffing cuts at the Social Security Administration could double disability benefit wait times to over 400 days and lead to tens of thousands more applicant deaths each year. The report also disputes Musk and DOGE's claims of widespread Social Security fraud.

“President Trump and Elon Musk have suggested that ‘millions and millions’ of dead people receive Social Security checks. That is an outrageous lie designed to undermine Americans’ faith in Social Security,” Sanders stated in a release regarding the report findings.

While poll respondents' willingness to pay more taxes is notable, it’s important to remember that any significant legislative changes to the Social Security program will likely require bipartisan support. As a result, Congress will need to balance ensuring long-term solvency with financial concerns and the needs of current and future retirees.

So, as Social Security debates continue on Capitol Hill and in the White House this year and beyond, stay informed and carefully consider how potential policy and tax changes could affect your retirement.

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Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and income tax brackets. Her award‑winning work has been featured in numerous national and specialty publications.