If you are a retiree, you know how important every dollar of your Social Security check can be. For years, many seniors have been frustrated that even after paying into the system their whole working lives, they are still taxed on those same benefits. That may soon change.
Earlier this month, Senator Ruben Gallego from Arizona introduced the “You Earned It, You Keep It Act” in the Senate. Representative Angie Craig of Minnesota introduced a similar version in the House back in April. This bill would permanently eliminate federal income taxes on Social Security benefits, which would mean more money in your pocket every month.
As Gallego put it, “Despite decades of paying into the system, seniors are still forced to pay taxes on their hard-earned benefits — all while the ultra-wealthy barely pay into the system.”
How are social security benefits taxed today?
Right now, Social Security benefits are subject to taxes if your income is above certain limits. Here is how it works today:
- Single filers with a combined income between $25,000 and $34,000 may pay taxes on up to 50% of their benefits.
- Married couples filing jointly with a combined income between $32,000 and $44,000 may also pay taxes on up to 50%.
- If your income is higher — more than $34,000 for individuals or more than $44,000 for couples — you could be taxed on up to 85% of your benefits.
For many retirees living on a fixed income, these taxes cut into money that could go toward essentials like rent, food, or healthcare.
How would this bill change social security taxes?
If this bill becomes law, federal taxes on Social Security benefits would be completely eliminated. Unlike the temporary relief included in former President Donald Trump’s “big beautiful bill” — which gave some seniors an additional deduction — this plan would be a permanent fix.
Here is what makes the bill different:
- No taxes at all on Social Security benefits, regardless of income level.
- Long-term funding fix by raising the payroll tax cap so that wages above $250,000 are subject to Social Security taxes (right now the cap is $176,100).
- Extended trust fund life — the Social Security trust fund would be able to pay full benefits until at least 2058, which is 24 years longer than expected under the current system.
That means not only would you keep more of your benefits today, but your kids and grandkids would also have a stronger program to rely on tomorrow.
What does this mean for retirees?
For retirees, this could be life-changing. Think about what keeping an extra 10% to 20% of your monthly check could do for you. That could mean more money for:
- Groceries and household expenses
- Prescription medications or healthcare costs
- Paying down debt
- Traveling to see loved ones
- Simply having peace of mind in retirement
Many seniors feel like they are being squeezed from all sides with rising costs of living. Eliminating federal taxes on Social Security would help take off some of that pressure.
Is this bill likely to pass?
The big question is whether Congress can come together to pass it. Social Security laws cannot be changed through the budget reconciliation process, which means the bill would need bipartisan support.
The good news is that Americans overwhelmingly support strengthening Social Security. According to the Bipartisan Policy Center, 93% of Americans say Social Security is a valuable federal program, and 83% want Congress to make fixing it a top priority.
With that kind of public pressure, there is a real chance this proposal could gain momentum in Washington. But as always, it will depend on whether lawmakers from both parties can agree.
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