Sponsors (17)
Official title: To amend the Internal Revenue Code of 1986 to repeal the inclusion in gross income of social security benefits, and for other purposes.
Introduced April 14, 2025 by Angela Craig · Last progress April 14, 2025
The bill reduces federal income tax burdens for current Social Security beneficiaries and raises payroll receipts from very high earners while modestly increasing future benefits for some high earners, but it shifts ongoing costs to general Treasury funds, creates political and administrative risks for trust fund financing, raises compliance and withholding burdens for high earners and employers, and introduces unequal treatment between current and future beneficiaries.
Current Social Security beneficiaries (seniors, retirees, Medicare beneficiaries) will pay less federal income tax because Social Security benefits are excluded from gross income after enactment, increasing their after‑tax income and potentially making some eligible for more tax credits.
Social Security, Railroad Retirement, and Hospital Insurance programs (and their beneficiaries and providers) are protected from an immediate funding shortfall because the bill requires Treasury reimbursements to backfill reduced transfers each fiscal year.
Workers with very high earnings (over $250,000 in a year) will contribute more of those high‑year earnings to Social Security, increasing payroll‑tax receipts that support the program.
All taxpayers broadly will bear ongoing, unspecified costs because Treasury general funds must reimburse trust funds each year for reduced transfers, increasing pressure on the federal budget and potentially worsening deficits.
Social Security, Railroad Retirement, and Hospital Insurance programs and their beneficiaries face political and policy risk because reimbursements rely on annual appropriations—future Congresses could alter, delay, or lapse payments, threatening program solvency or benefit flows.
High‑earning employees (over $250,000 in a year) will face higher payroll tax withholdings, reducing take‑home pay and potentially changing incentives for high‑income workers.
Based on analysis of 4 sections of legislative text.
Removes Social Security benefits from taxable income, adjusts FICA wage rules for pay over $250,000, and adds a 2% benefit bend point for new beneficiaries after 2025 while funding trust funds from Treasury.
Repeals the rule that treats Social Security benefits as taxable income and changes payroll-tax and benefit rules for high earners. The bill directs Treasury to make annual appropriations to Social Security and railroad retirement trust funds to replace reduced transfers from repealing benefit taxation, changes how "wages" are defined for FICA taxes (limiting the exemption for pay above the contribution base for workers paid over $250,000 by the same employer), and adds a new 2% bend point to the Social Security benefit formula so earnings above $250,000 (or above the contribution-and-benefit base if higher) count toward Title II benefits for people who first become eligible after 2025.