External Estimates

This chapter compares our PolicyEngine estimates with projections from other major analytical organizations including the Congressional Budget Office (CBO), Social Security Trustees, Tax Foundation, and Joint Committee on Taxation (JCT).

Summary of PolicyEngine 10-Year Estimates¶

Option 1: Full Repeal of Social Security Benefit Taxation¶

10-Year Impact (2026-2035): $-1,509 billion (static)

Option 2: Tax 85% of Benefits Uniformly¶

10-Year Impact (2026-2035): $424 billion (static)

Option 3: Tax 85% with Bonus Senior Deduction¶

10-Year Impact (2026-2035): $170 billion (static)

Option 4: Social Security Tax Credit System ($500)¶

10-Year Impact (2026-2035): $228 billion (static)

Option 5: Roth-Style Swap (Immediate)¶

10-Year Impact (2026-2035): $745 billion (static)

Option 6: Phased Roth-Style Swap¶

10-Year Impact (2026-2035): $1,309 billion (static)

Option 7: Eliminate Bonus Senior Deduction¶

10-Year Impact (2026-2035): $73 billion (static)

Option 8: Tax 100% of Benefits¶

10-Year Impact (2026-2035): $880 billion (static)

Comparison with External Estimates¶

Important Note¶

Important Note: These estimates were produced before the passage of the One Big Beautiful Bill, which, amoung several individual income tax provisions, includes a temporary $6,000 bonus senior deduction (2025-2028). This new deduction reduces the baseline revenue from Social Security benefit taxation, which affects the cost estimates of full repeal.

Option 1: Full Repeal of Social Security Benefit Taxation¶

Analysis of Differences¶

Our estimate of $-1.5 trillion for full repeal falls within the range of prior estimates from major analytical organizations, as shown in the table above. Direct comparison is complicated by:

1. Different budget windows: Our 2026-2035 window versus the 2025-2034 windows used by other organizations

2. Baseline differences: Our estimates incorporate the One Big Beautiful Bill’s bonus senior deduction (2025-2028), which reduces baseline Social Security benefit taxation revenue

3. Methodological differences: Static versus conventional (behavioral) scoring approaches

The Congressional Budget Office estimates full repeal would cost $1.6 trillion over 2025-2034 using conventional scoring {cite}`cbo2024options`. The Social Security Trustees project slightly higher costs of$1.8 trillion over the same period Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (2024). The Tax Foundation estimates range from $1.3 trillion (dynamic scoring) to$1.4 trillion (conventional scoring) Tax Foundation (2024).

Our static estimate of $-1.5 trillion falls at the lower end of this range, which is consistent with:

• Our later budget window (2026-2035 vs 2025-2034) missing one year of the bonus senior deduction impact

• Use of static rather than conventional scoring for this comparison

• Different baseline economic and demographic assumptions

Option 2: Tax 85% of Benefits Uniformly¶

Comparing taxation of Social Security benefits:

The JCT estimate of $318.4 billion represents forgone revenue over a **5-year period (2024-2028)**, while our estimates are over a **10-year period (2026-2035)**. The JCT figure represents approximately$63.7 billion annually in revenue loss from the current partial exclusion of Social Security benefits from taxation.

CBO has also analyzed a different proposal to “Tax Social Security and Railroad Retirement Benefits in the Same Way That Distributions From Defined Benefit Pensions Are Taxed,” which would establish a basis recovery system and generated an estimated $458.7 billion over 2021-2030 (Congressional Budget Office (2024)).

Our Option 2 (uniform 85% taxation) estimate of $424 billion represents revenue from eliminating the current partial exclusion that creates gaps in Social Security benefit taxation. Our Option 8 (100$880 billion represents the upper bound of potential revenue from taxing all Social Security benefits.

Option 7: Eliminate Bonus Senior Deduction¶

The Joint Committee on Taxation estimated the revenue impact of the bonus senior deduction included in the One Big Beautiful Bill Act Joint Committee on Taxation (2025). The JCT projects that the $6,000 bonus senior deduction for taxpayers aged 65 and older will reduce federal revenues by$66.3 billion over the ten fiscal years from 2025 through 2034.

Our Option 7 analysis shows that eliminating this deduction would save $73 billion from 2026-2035 (the deduction expires at the end of 2028 under current law, with the main impact occurring 2026-2028). Our estimate is slightly higher than JCT’s because we include the full 10-year window, though the revenue impact after 2028 is minimal.

Summary¶

Our PolicyEngine estimates align closely with projections from established analytical organizations, with differences attributable to:

• Budget window variations (2026-2035 vs 2025-2034)

• Baseline policy differences (incorporation of One Big Beautiful Bill)

• Scoring methodology (static vs conventional vs dynamic)

• Specific microsimulation model assumptions

The consistency across methodologies validates our modeling approach while highlighting the importance of clearly specifying baseline assumptions and budget windows when comparing revenue estimates.