Over the course of July, there had been much back and forth regarding whether or not taxes on Social Security income had been eliminated under President Donald Trump’s mega bill and reconciliation package, the One Big Beautiful Bill Act. The bottom line is that taxes on Social Security income have not been eliminated, however, under the new legislation, seniors can benefit from an additional $6,000 tax deduction if their income is below a certain threshold.
In order to claim Social Security benefits in your retirement, you pay a portion of your earnings into the dedicated payroll tax throughout your working career. However, up to 85% of your benefits could be subject to taxation if your total income exceeds a certain threshold. As such, during the 2024 campaign trail, Trump often made a promise to eliminate taxes on Social Security if elected to office.
Subsequently with the passage of the One Big Beautiful Bill Act, both the White House and the Social Security Administration (SSA) had initially made claims that taxes on benefits have been eliminated for most resulting in confusion from beneficiaries and criticism from lawmakers and former SSA officials. The SSA has since admitted that its framing of the new bill was inaccurate following questioning from Sen. Elizabeth Warren.
Now, a new bill aimed at eliminating taxes on Social Security benefits has been introduced by Sen. Ruben Gallego, D-Arizona. The bill is titled the You Earn It, You Keep it Act, and here is everything you need to know.
Will taxes on Social Security income be eliminated?
Eliminating taxes on Social Security income is easier said than done as it would mean a minor source of revenue to the program will be lost at a time where the program is uncomfortably close to a shortfall, not to mention that it requires Congressional approval. Due to the One Big Beautiful Bill Act and its additional tax deduction for seniors, the threshold of taxable benefit income increases and as a result, a higher number of seniors will now be exempt from paying taxes on their Social Security benefits. This tax deduction, however, will only be in effect for a temporary period ending in 2028.
As such, Sen. Ruben Gallego, D-Arizona has now introduced the You Earn It, You Keep It Act with the goal of eliminating taxes on benefit income. In April, Rep. Angie Craig, D-Minnesota introduced a House version of this bill as well. If passed, this bill would bring a permanent end to taxes on benefits
“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,” Gallego shared in a statement.
In addition to eliminating taxes on benefits, this bill would also expand and have the payroll tax apply to annual earnings exceeding $250,000. The wage cap for 2025 currently sits at $176,100 which means the proposed bill could potentially help in addressing the program’s projected downfall, at least in part.
Support for the bill
The Senior Citizens League — a non partisan senior advocacy group — has long been calling for Congress to bring an end to taxes on Social Security benefits and as such, the group has shared its support of the newly introduced You Earn It, You Keep It Act. Shannon Benton, executive director at the Senior Citizens League said that, “eliminating federal taxes on Social Security benefits is a commonsense step to ensure older Americans can keep more of what they’ve earned.”
According to the Committee for a Responsible Federal Budget, “because the “big beautiful” law did not include any offsets for the reduced revenue from federal taxes on benefits, it would accelerate the depletion dates.” However, parallel to this, if the You Earn It, You Keep It Act is passed, it will “extend the Social Security trust funds’ ability to pay benefits in full and on time for 24 years, or until 2058,” as per Gallego’s office. At present, the projected shortfall of the program is expected to occur as soon as 2033.