A new push to protect retirees’ income
For decades, seniors have had to deal with an unpleasant surprise—paying taxes on the very Social Security benefits they worked hard for. Now, a new bill in Congress aims to change that. Sen. Ruben Gallego of Arizona has introduced the “You Earn It, You Keep It” Act, which would permanently eliminate federal income taxes on Social Security benefits.
The plan, which already has a House version sponsored by Rep. Angie Craig of Minnesota, is being welcomed by many retirees who feel their benefits should never have been taxed in the first place. But the bill doesn’t just stop there—it also proposes a way to extend the life of the Social Security trust fund.
Why Social Security gets taxed in the first place
Right now, depending on your income, you may owe federal taxes on up to 85% of your Social Security benefits. For example:
- Single filers with incomes above $25,000 may start paying taxes.
- Married couples filing jointly with incomes over $32,000 fall into the same boat.
This system has long been criticised as unfair. Seniors argue that they already paid into Social Security during their working years, so taxing those benefits again feels like double-dipping.
What Gallego’s bill promises
If the “You Earn It, You Keep It” Act becomes law, Social Security benefits would be completely tax-free for everyone. Retirees would no longer need to worry about setting aside part of their monthly check to pay Uncle Sam.
But here’s the catch: eliminating that tax means the government loses revenue—billions of dollars every year. To make up for it, the bill raises the Social Security payroll tax cap. Currently, only wages up to $176,100 are subject to Social Security taxes. Under Gallego’s plan, earnings above $250,000 would also be taxed, ensuring the wealthiest Americans pay more into the system.
Extending Social Security’s future
One of the most important selling points of the proposal is that it could extend the life of the Social Security trust fund until 2058. Right now, without action, the fund is projected to run dry by 2034, forcing a 19% cut in benefits. That looming date has been hanging over retirees’ heads like a storm cloud.
According to Social Security’s chief actuary, this bill could buy the program more than two decades of breathing room—something millions of Americans would welcome.
The politics of passing it
While the bill sounds promising, there’s a big hurdle: politics. Changes to Social Security require bipartisan support, and Congress has struggled to agree on much lately. Republicans and Democrats both say they want to protect the program, but they disagree on how.
Still, polls show that 93% of Americans view Social Security as one of the most important federal programs, and a large majority want Congress to act. That kind of public pressure could give the bill momentum.
How this differs from Trump’s tax break
Some seniors may remember President Trump’s “big beautiful bill,” which included an additional $6,000 deduction for those over 65. While helpful, it didn’t remove taxes on Social Security benefits entirely—and it expires after 2028.
Gallego’s proposal is different because it makes Social Security tax-free permanently. For retirees on a tight budget, that’s a major difference.
The bottom line
If passed, the “You Earn It, You Keep It” Act could mean that Social Security checks stretch further, and the programme itself survives longer. For retirees, it’s a win-win: more money in their pockets today and peace of mind about tomorrow.
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Key takeaways
- No more taxes on benefits: The bill would permanently end federal income taxes on Social Security benefits.
- Payroll tax changes: To cover costs, wages above $250,000 would be taxed for Social Security.
- Trust fund extended: Experts say the plan could extend full benefits through 2058.
- Big difference from Trump’s deduction: Unlike the temporary $6,000 deduction in Trump’s tax bill, this proposal removes benefit taxes entirely.
- Still needs support: Passing the bill will require bipartisan compromise in Congress.
