"It's wrong that pensioners are paying higher tax than ordinary wage earners," Magdalena Andersson, the party's economics spokesperson, said in an statement titled 'Lower tax for pensioners.'
If the new deal were to come into effect then Sweden's senior citizens would be better off to the tune of 50 kronor ($7.50) a month.
Swedes earning over 60,000 kronor a month, meanwhile, will be forced to pay more tax in order to generate the 1.5 billion kronor the party claims is required to fund the pensioner tax cut.
However, the Swedish Taxpayers' Association (Skattebetalarna) claims that a fund of 8 billion kronor is needed to put retired income on the same level as employed income.
The Social Democrats included the proposals in its shadow budget, with party members keen to make pensioner tax an election issue.
Andersson conceded that the tax gap was unlikely to be removed entirely if her party secured a full-term in office.
Plans to cut pensioner tax by the Social Democrats were not well-received by the Liberal Party's economics spokesperson Carl B Hamilton.
He accused Andersson of "speaking with double tongue" and said the rival party's idea was flawed. He added that the alliance had reduced the rate of pensioner tax four times and said that the Social Democrats had never done so while in office.
"The idea of the difference is that you reward those who work ahead of those who don't work. The Social Democrats' philosophy is to reward the unemployed," Hamilton told the TT news agency.
Meanwhile, the chairman of the pensioners organistation SPF, Karl Erik Olsson, said he was glad the Social Democrats were taking notice of pensioners.
"We've got a 50 kronor bill from the alliance a few times and it'll take a bit more than than to make us happy," he said.
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Earlier in April the Social Democrats pledged to reintroduce restaurant VAT and increase employers social security contributions if they win the upcoming election.
Swedes go to the polls in September.