A recent analysis from the Social Security Administration’s Office of the Chief Actuary (OACT) reveals that President Trump’s tax and spending megabill, known as the One Big Beautiful Bill Act (OBBBA), could accelerate the depletion of the Social Security trust funds. The analysis, prompted by a request from Sen. Ron Wyden (Ore.), the top Democrat on the Senate Finance Committee, suggests that the law’s tax changes could have significant impacts on the program’s financial health.
Key Findings from the Actuarial Analysis
The OACT report estimates that the implementation of the OBBBA will increase program costs beginning in 2023, primarily due to changes in the taxation of Social Security benefits. The analysis indicates that because the revenue from income taxation of Social Security benefits is directed to the Social Security and Medicare trust funds, these changes will have direct consequences on the financial status of the trust funds.
Depletion Acceleration: The combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds, which are typically treated as a single unit, will now see an acceleration in their depletion date. Under the previous trustees’ report baseline, these funds were projected to be depleted by the third quarter of 2034. With the new law in effect, depletion is expected to occur by the first quarter of 2034, which is about 9 months earlier.
OASI Trust Fund Impact: The depletion of the OASI Trust Fund alone is now expected to occur by the fourth quarter of 2032, moving up from the first quarter of 2033. On the other hand, the DI Trust Fund reserves are not expected to be depleted during the 75-year projection period when considered separately.
Program Cost Increase: The total increase in the OASDI program’s cost through 2034 is projected to be $168.6 billion, driven by the lower levels of tax revenue from Social Security benefits starting in 2023. This reflects a significant shortfall in funding for the program due to the recent changes in tax laws.
The 75-Year Actuarial Balance and Long-Term Effects
The OACT also predicts that the implementation of the OBBBA would decrease the 75-year OASDI actuarial balance by 0.16% of taxable payroll. This means that the overall financial health of Social Security, as measured over the next 75 years, would worsen as a result of the new tax changes.
The analysis also noted that this projection is limited to the effects of the income tax changes and how these changes will impact the taxation of Social Security benefits. The full impact of the law on the OASI and DI Trust Funds will be further evaluated in 2026, when new data and assumptions will be incorporated into the Trustees’ Report.
Implications for Social Security Solvency
The OBBBA’s effects could complicate efforts to extend Social Security’s solvency, particularly if the law’s changes result in further revenue shortfalls. The OACT will use this new analysis as a baseline when evaluating future proposals aimed at ensuring the program’s long-term stability, especially those focusing on extending solvency.
As lawmakers look for ways to stabilize the trust funds, the 2026 Trustees Report will likely provide further insights into how the OBBBA’s impact can be mitigated or reversed.
