A bill introduced in the House aims to scrap federal taxes on Social Security benefits starting in 2025.
It would also introduce a new payroll tax on earnings over $250,000 to increase funding.
According to an SSA analysis, this could allow full Social Security payments through 2054 – 20 years longer than current projections.
About 40% of recipients currently pay taxes on benefits.
The bill’s sponsors say it provides a tax cut for seniors while securing the program.
“This bill is a win-win — it’s a tax cut for seniors and a way to ensure more Americans can depend on the Social Security benefits they’ve earned,” Rep. Angie Craig said.
It could eliminate taxes on benefits for those with incomes under $25,000 individually or $32,000 jointly.
Supporters argue historic inflation is eroding seniors’ budgets, and they should not be double-taxed on Social Security.
“Most of it goes to rent and transportation,” retired elementary school teacher Sally Hokkanen said of her Social Security payments.
“Historic inflation is eroding seniors’ budgets, jeopardizing the financial security they’ve worked their whole lives to achieve,” Rep. Yadira Caraveo said. “The last thing they need is for the government to double tax their hard-earned Social Security benefits.”
Its passage could mean fully funded benefits until 2054 rather than benefits being reduced starting in 2033 under current projections.
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