The Social Security Administration (SSA) is weighing in on a recent bill that would eradicate federal taxes on benefits for seniors.
Rep. Angie Craig (D-MN) reintroduced the You Earned It, You Keep It Act on January 25, which would eliminate all federal taxes on Social Security benefits for retirees starting in 2025. Craig had originally presented the bill in August 2022, but it did not advance during the 117th Congress.
If passed this time around, the bill would be “fully paid for” by raising Social Security payroll taxes for higher-earning Americans who earn over $250,000 annually.
According to estimates from a non-partisan analysis, the bill would also allow the SSA to continue making all benefit payments on time and in full through 2054—20 years longer than the Social Security’s Board of Trustees current projection of 2034.
“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.”
Since its reintroduction, the bill has seen support from Stephen Goss, chief actuary of the Social Security Administration, who last week said the enactment could extend the ability of the Old Age, Survivors, and Disability Insurance (OASDI) program to pay scheduled benefits in full and on time for an additional 20 years after 2034.
According to Goss, under current law, 80% of scheduled benefits are projected to be payable on a timely basis in 2034 after depletion of the combined trust fund reserves, with the percentage payable declining to 74% for 2097. Under the proposal, 91% of scheduled benefits are projected to be payable on a timely basis in 2054 after depletion of the combined trust fund reserves, with the percentage payable declining to 88% for 2097.
“The date of projected depletion of the combined OASI and DI Trust Fund reserves would be moved from 2034 under current law to 2054 assuming enactment of the proposal, under the intermediate assumptions of the 2023 Trustees Report,” Goss wrote in his letter detailing his own estimates.
The bill has been backed by progressive-leaning Social Security Works, an organization that lobbies for Social Security reform, along with Democratic lawmakers and 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).
SEE ALSO:
- Democrat Bill Resurfaces to Eliminate Federal Taxes on Social Security
- Long-Term Inflation Forecast Sees 2025 with Lowest Social Security COLA Since 2020
- Haley Doubles Down on Raising Social Security Retirement Age for Younger Americans
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
