This bill repeals the inclusion of social security benefits in adjusted gross income, ensuring that Social Security benefits are not taxed, and provides replacement funding to Social Security and Railroad Retirement funds.
Jefferson Van Drew
Representative
NJ-2
The "No Tax on Social Security Act" repeals the inclusion of social security benefits in adjusted gross income, ensuring these benefits are no longer subject to federal income tax. It amends Section 86 of the Internal Revenue Code of 1986 to exclude social security benefits from taxable income, starting after the enactment date. The act also allocates funds to offset any reduction in social security and railroad retirement funds resulting from this change.
Social Security Checks Get a Boost: New Bill Eliminates Federal Taxes on Benefits
The "No Tax on Social Security Act" does exactly what it says on the tin: it gets rid of federal taxes on Social Security benefits. Starting with the tax year after this bill is enacted, the money you receive from Social Security is entirely yours – no more figuring out how much the IRS gets. This is a big change from the current rules, outlined in Section 86 of the Internal Revenue Code, which can make calculating your taxes a real headache.
Cash in Your Pocket
This bill directly impacts anyone receiving Social Security or Railroad Retirement benefits. Think about it like this: if you're a retired teacher, a veteran receiving benefits, or anyone else relying on Social Security, you'll likely see more money in your bank account each month. No more taxes on those benefits means more cash to cover groceries, rent, or that much-needed vacation. The exact amount will vary depending on your individual benefits, but the bottom line is more money stays with you.
Keeping Social Security Solid
Now, you might be thinking, "If the government's not collecting taxes on Social Security, won't that hurt the program's funding?" The bill's authors thought of that. The "No Tax on Social Security Act" includes a built-in safeguard. It specifically directs the Treasury to transfer funds each fiscal year to make up for any money lost by repealing this tax. This ensures Social Security and Railroad Retirement benefits remain fully funded, so there's no need to worry about cuts down the line. This is done by appropriating funds each fiscal year to offset the reduction, as stated directly in the bill.
Real-World Impact
Imagine a retired couple who worked in construction and retail, now relying on their combined Social Security benefits. Under current law, a portion of that income is taxable. This bill wipes that out, meaning they keep more of their hard-earned benefits. Or picture a single parent receiving survivor benefits – that extra cash could make a real difference in covering childcare or daily expenses. By eliminating the tax, the bill simplifies things for seniors and others on fixed incomes, letting them keep more of what they've earned. The change is slated to kick in for tax years after the bill is enacted, so keep an eye out for updates on when it officially goes into effect.