Sponsors (35)
The bill raises after‑tax income and simplifies tax filing for Social Security beneficiaries while protecting trust funds via appropriations, but it shifts fiscal costs onto the federal budget—raising borrowing or spending‑cut risks and leaving some benefits dependent on annual appropriations.
Seniors and other Social Security beneficiaries will have higher after-tax income because Social Security benefits would no longer be included in taxable income.
Seniors and other beneficiaries will face simpler tax filing because the bill removes the need to compute the taxable portion of Social Security benefits under section 86.
Social Security and related trust funds will be held harmless for the reduced transfers because the Treasury is authorized to make annual appropriations equal to the lost transfers.
All taxpayers could face higher federal borrowing or tougher spending tradeoffs because the Treasury must appropriate funds to replace transfers no longer generated by taxable Social Security benefits.
The bill's stated preference against using tax increases to fund the hold‑harmless appropriations increases the likelihood costs will be covered by deficits or by spending cuts elsewhere, shifting burdens onto taxpayers and middle‑class families.
Railroad Retirement benefits may become more dependent on annual discretionary appropriations, exposing railroad retirees and related beneficiaries to year‑to‑year budget negotiations despite the hold‑harmless intent.
Based on analysis of 2 sections of legislative text.
Stops applying the Social Security benefits inclusion rule for future tax years and authorizes Treasury payments to replace reduced transfers to Social Security and Railroad Retirement funds.
Official title: To amend the Internal Revenue Code of 1986 to repeal the inclusion in gross income of Social Security benefits.
Introduced February 6, 2025 by Thomas Massie · Last progress February 6, 2025
Repeals the rule that can make part of Social Security benefits taxable for taxable years beginning after enactment, so Social Security benefits would no longer be included under that provision going forward. It also authorizes annual appropriations from the Treasury to each Social Security trust fund and each Railroad Retirement fund equal to the reduction in transfers caused by that repeal, and includes a nonbinding statement that revenue to fund those payments should not come from tax increases.