Summary

Ends taxation of Social Security benefits by removing them from gross income for tax years beginning after enactment, so beneficiaries will no longer include those benefits when calculating federal income tax. To make up for changes in transfers to benefit trust funds, the bill directs the Treasury to appropriate each fiscal year amounts equal to the reductions in transfers to the Social Security trust funds and Railroad Retirement Act funds caused by the repeal, and includes a nonbinding statement that taxes should not be raised to pay those appropriations.

• Removes Social Security benefits from gross income for federal income tax purposes for taxable years beginning after enactment.
• Requires Treasury to appropriate annually amounts equal to reductions in transfers to Social Security and Railroad Retirement Act funds caused by the repeal.
• Includes a nonbinding Sense of Congress recommending that tax increases not be used to fund those appropriations.
• Directly lowers taxable income and likely federal income tax liability for Social Security beneficiaries.
• Reduces federal income tax receipts and replaces some automatic trust fund transfers with explicit appropriations.
• Could affect calculations and eligibility for programs and premiums that rely on AGI or MAGI.
• Administrative work required for IRS and SSA to update tax forms, instructions, and related income reporting.
• Short and narrowly focused legislation — two sections covering tax change and funding mechanism.