The Bill That Would Eliminate Federal Taxes on Social Security Benefits

Social Security is a lifeline for millions. According to a Senior Citizens League survey, nearly three-quarters of seniors (73%) depend on Social Security benefits for more than half of their income, and nearly 40% depend on it for their entire income.

So imagine how difficult it must have been for many Social Security recipients when, in 1984, their benefits began to be taxed for the first time, particularly when they didn't have an IRA or other retirement account to draw from.

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Proposed legislation

In early September 2025, Sen. Ruben Gallego of Arizona introduced a bill that would permanently eliminate federal taxes on Social Security benefits. The proposal, called the You Earn It, You Keep It Act, mirrors a bill introduced in April 2025 by Rep. Angie Craig of Minnesota.

In 2026, wages up to $184,500 are subject to the Social Security payroll tax. To offset the cost, the new bill would expand payroll taxes to apply to all annual earnings over $250,000.

Gallego said this of the bill: "Like a lot of Americans, I've been paying into Social Security since my first job at 14. But despite decades of paying into the system, seniors are still forced to pay taxes on their hard-earned benefits -- all while the ultra-wealthy barely pay into the system at all."

Not the only bill on the table

Sens. Tommy Tuberville of Alabama and Tim Sheehy of Montana have introduced the Senior Citizens Tax Elimination Act in an effort to end what Tuberville's office refers to as an "unjust double tax on Social Security benefits." Rep. Thomas Massie of Kentucky, who recently lost the Republican primary for the 2026 midterm election, introduced companion legislation in the House of Representatives.

Said Senator Tuberville:

Seniors work the majority of their adult lives so that they can spend their retirement comfortably. In a day and age where the cost of living has skyrocketed, our seniors should not experience a second tax on their Social Security when they've already paid income tax on their paychecks. As Alabama's voice on the Senate Aging Committee, I'll continue to fight for our seniors to enjoy their hard-earned Social Security benefits.

A persistent myth

It's not uncommon for those planning for retirement to believe their Social Security benefits won't be taxed. However, while Supplemental Security Income (SSI) is never taxed, about 50% of Americans who receive retirement, survivor, and disability benefits may pay taxes on up to 85% of their benefits, depending on annual income.

While President Trump's One Big Beautiful Bill Act (OBBBA) provides seniors with an additional federal tax deduction, it's only designed to last through 2028. The proposals of legislators like Gallego, Craig, Tuberville, Sheehy, and Massie would permanently end the federal taxation of benefits.

Given the partisan nature of today's politics, these bills are likely to face an uphill battle. In the meantime, they provide hope to those seniors struggling to stay afloat.

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