July 10, 2025 — Washington, D.C. — President Donald Trump is claiming victory on tax reform—but the details of the new law tell a different story. While Trump insists he has eliminated taxes on Social Security benefits, overtime, and tip income, the reality is that his 2025 tax bill offers only temporary deductions, not permanent tax relief.

Claims vs. Reality: Temporary Deductions, Not Full Exemptions

Trump has repeated the line: “No tax on tips, no tax on Social Security, no tax on overtime.” He echoed this during a Fox News interview, a Cabinet meeting, and in recent fundraising emails. However, the 330-page tax and spending bill passed last weekend only includes limited deductions that:

  • Cap deductions at $12,500 for overtime and $25,000 for tips

  • Only affect federal income tax, not Social Security or Medicare taxes

  • Expire in 2028, the final year of Trump’s term if re-elected

For Social Security, the average retiree will receive a tax deduction worth around $600, and only if their income exceeds the current exemption threshold. In other words, millions of seniors will still pay taxes on benefits.

“It’s about $750 in tax cuts and $2,000 in tariff increases,” said Jason Furman, former White House economic advisor under President Obama.

Tariffs Could Cancel Out Any Tax Relief

Trump’s tax bill coincides with a dramatic escalation of his tariff policy, which could impose thousands of dollars in additional costs on American households.

Starting next month, Trump has promised to enforce new import tariffs, including:

  • 25% duties on goods from Japan and South Korea

  • 40% tariffs on imports from Laos and Myanmar

  • A potential 50% tariff on European goods if no trade deal is reached

The result: a typical American family may face higher living costs that outstrip the limited relief provided by the tax deductions.

Republicans Celebrate, But the Numbers Don’t Add Up

Supporters like Sen. Bernie Moreno (R-OH) claim the Trump tax bill gives families up to $7,500 in relief, but that figure is wildly inflated. In reality:

  • The child tax credit increase is only $200, bringing it to $2,200

  • The combination of tax changes cited in Moreno’s post is worth just $1,916

Moreno’s office declined to comment on the misleading figures.

Meanwhile, congressional Republicans are also celebrating the permanent extension of the 2017 tax cuts—most of which benefit wealthier Americans.

Critics Slam the Tradeoffs

Ken Martin, chair of the Democratic National Committee, criticized the bill’s cuts to Medicaid and food assistance, calling Trump’s policies “a rigged system for the ultra-wealthy.”

“He promised to lower costs, but instead he passed the largest cuts to health care and food assistance in American history,” Martin said. “Trump is a crooked liar and a con artist rigging the economy for the rich.”

Fed Unlikely to Act as Tariff Uncertainty Grows

As economic uncertainty grows, the Federal Reserve remains cautious. Trump continues to pressure Chair Jerome Powell to lower interest rates, but tariffs and inflation risk make that unlikely.

“The latest tariff letters only increase the odds that a Fed rate cut won’t come until late 2025 or beyond,” said Deutsche Bank strategist Jim Reid.

Trump’s 2025 tax plan may offer temporary relief, but it falls short of his sweeping campaign promises. With tariffs rising and middle-class benefits set to expire in 2028, the administration’s economic policy is under growing scrutiny.

For author: Staff Writer
Courtesy of: Forbes
Source: HuffPost