Sponsor
John Peter Ricketts
Senator · R-NE
Senator · R-NE
The bill gives targeted, temporary tax relief to certain retirement/tier‑1 railroad Social Security recipients while preserving benefit financing through increased federal transfers — at the cost of higher near‑term federal outlays, added filing complexity, and unequal treatment of disabled beneficiaries.
Medicare and Social Security beneficiaries: Congress appropriates transfers to the OASI, DI, and Medicare HI trust funds to preserve benefit financing despite lower Treasury receipts.
Seniors and railroad retirees: For tax years 2026 and 2027 they will owe less federal income tax on retirement/tier‑1 railroad Social Security benefits (about a 10% reduction in 2026 and 20% in 2027).
All taxpayers: The federal government increases near‑term outlays to backfill Social Security and Medicare trust funds, raising budgetary pressure and adding to federal spending.
Disabled Social Security recipients: The tax relief excludes disability benefits, creating unequal treatment between retirement railroad beneficiaries and disabled beneficiaries.
Taxpayers and tax preparers: The relief is temporary and limited to 2026–2027, adding filing complexity as taxpayers must apply different inclusion rules and phased reductions.
Based on analysis of 2 sections of legislative text.
Temporarily reduces the taxable portion of retirement/tier 1 railroad Social Security benefits by 10% in 2026 and 20% in 2027, applies inclusion tests separately for retirement and disability benefits, and replaces lost receipts to Social Security and Medicare trust funds.
Official title: Amend the Internal Revenue Code of 1986 to provide for a temporary reduction of the inclusion in gross income for old-age and survivors insurance benefit payments under the Social Security Act, as well as tier 1 railroad retirement benefits.
Introduced March 25, 2025 by John Peter Ricketts · Last progress March 25, 2025
Reduces the portion of Social Security retirement and tier 1 railroad benefits counted as taxable income for two years by separating the inclusion tests for retirement and disability benefits and lowering the retirement/tier 1 railroad inclusion by 10% in 2026 and 20% in 2027. The bill directs the Treasury to transfer amounts equal to the lost revenue to the OASI, DI, and Medicare Hospital Insurance trust funds so the trust funds receive the offsetting amounts.