Social Security & Medicare

From the article:

The Trust Fund Connection

Since bipartisan reform in 1983, the Social Security system has been supported by a dedicated revenue stream generated from federal income taxation of benefits. This isn’t general revenue that can be used for any government purpose. By law, these tax revenues are deposited directly into the Social Security Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds, as well as the Medicare Hospital Insurance (HI) trust fund.

This structure was deliberately created to help shore up the programs’ finances as the American population aged. Under the law prior to OBBBA, taxation of benefits was projected to contribute approximately $100 billion to the trust funds in 2025, growing to over $140 billion by 2027.

Accelerating Insolvency

The OBBBA’s new tax deduction for seniors directly reduces this critical revenue stream. By increasing the deduction for millions of older Americans, the law decreases the amount of Social Security benefits subject to taxation.

The nonpartisan Committee for a Responsible Federal Budget (CRFB) estimates that the “senior bonus” and other tax changes in the bill will lower revenue collected from benefit taxation by approximately $30 billion per year.