A bill seeking to eliminate federal taxes on Social Security benefits for seniors has re-emerged in Congress.
Rep. Angie Craig (D-MN) announced the reintroduction of the You Earned It, You Keep It Act on Jan. 25, which, if passed, would eliminate all federal taxes on Social Security benefits beginning in 2025. The bill would be paid for by raising the cap on the Social Security payroll tax, so higher-earning Americans (individuals earning more than $250,000 annually) continue paying into Social Security.
Back in August of 2022, Rep. Craig introduced H.R. 8717, the You Earned It, You Keep It Act, also seeking to exclude Social Security benefits from gross income for purposes of federal income taxes. The bill did not advance during the 117th Congress.
According to a non-partisan analysis, cited in a press release from Rep. Craig, the new You Earned It, You Keep It Act would reduce the federal debt by $8.9 trillion over 75 years.
It would also allow the Social Security Administration to continue making all benefits payments on time and in full through 2054, which is 20 years longer than the current projection of 2034. According to the most recent Social Security Board of Trustees Report issued March 31, 2023, only 77% of scheduled benefits will be payable by 2033, absent Congressional action.
“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. And on top of that, it’s fiscally responsible,”
Rep. Angie Craig (D-MN)
An August 2023 report from the non-partisan Committee for a Responsible Federal Budget (CRFB) found a 23% benefit cut would represent an immediate $17,400 cut in current dollar annual benefits for a typical dual-income couple retiring in 2033, and an immediate $13,100 cut for a typical single-income couple.
“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. And on top of that, it’s fiscally responsible,” Craig said. “I’m leading the charge on this issue in Congress because we need to get money back in the pockets of middle-class Americans. The You Earned It, You Keep It Act will help us get it done.”
Reps. Ro Khanna (D-CA), Yadira Caraveo (D-CO), Don Davis (D-NC), Mary Peltola (D-AK), Andrea Salinas (D-OR) and Hillary Scholten (D-MI) were original co-sponsors of the bill.
“For almost a century, America has upheld a fundamental promise—that if you work hard and play by the rules, you’ll be able to enjoy a secure retirement. However, historic inflation is eroding seniors’ budgets, jeopardizing the financial security they’ve worked their whole lives to achieve. The last thing they need is for the government to double tax their hard-earned Social Security benefits,” said Rep. Caraveo.
Social Security Works, an organization dedicated to protecting and improving Social Security, endorsed Rep. Craig’s bill.
Click here to read the You Earned It, You Keep It Act.
SEE ALSO:
• 9 States Still Taxing Social Security Benefits in 2024
• 7 Key Social Security Metrics for 2024
• 3 Proposals to ‘Fix’ Social Security
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
