Legislation has been reintroduced that would repeal the inclusion of Social Security benefits in gross income.
The bill, the Senior Citizens Tax Elimination Act, H.R. 1040, was reintroduced on Feb. 6 by Rep. Thomas Massie, R-Ky.
"Before 1984, Social Security benefits were exempt from the federal income tax. Congress then enacted legislation to tax a portion of those benefits, with the share gradually increasing as a person's income rose above a specified income threshold," Massie said in a statement.
"Although seniors have already paid tax on their Social Security contributions via the payroll tax, they are still required to list these benefits as taxable income on their tax returns," Massie added. "This is simply a way for Congress to obtain more revenue for the federal government at the expense of seniors who have already paid into Social Security. My bill would exempt Social Security retirement benefits from taxation and boost the retirement income of millions of older Americans."
The Senior Citizens Tax Elimination Act would amend the Internal Revenue Code "to terminate the inclusion of tier I railroad retirement benefits and Social Security benefits in an individual’s gross income," Massie said.
The Senior Citizens League estimates that eliminating taxes on Social Security benefits — which President Donald Trump has promised — would save the typical senior household about $3,000 annually if implemented in 2025.
In its analysis for the upcoming edition of its monthly newsletter, the League estimates "that a typical senior household would pay $3,940 in federal income taxes if Social Security benefits were excluded, compared to an estimated $7,022 under the current law — resulting in a savings of $3,082," the group said Wednesday.
Eliminating taxes on Social Security benefits would also help retirees regain buying power they've lost due to cost-of-living adjustments that don't keep up, The Senior Citizens League said.
"Estimated savings from the Senior Citizens Tax Elimination Act would make up for about 69% of the buying power Social Security payments have lost since 2010 due to inadequate COLAs," the group said. "TSCL research estimates that the average yearly Social Security benefits for retired workers are worth approximately $4,442 less today than they were in 2010, after adjusting for inflation."
Maria Freese, senior legislative representative at the National Committee to Preserve Social Security and Medicare, said the group does not support Massie's bill.
"It requires the Treasury to appropriate money to fill in any revenue lost to the trust funds and includes a 'sense of the Congress' against increasing taxes to pay for it," Freese said Wednesday. "We have long objected to using appropriated funds to replace dedicated revenue into Social Security. It undermines the 'earned benefit' nature of the program and forces Social Security to compete with every other government funding priority."
The Committee, Freese said, prefers Rep. John Larson’s approach in the Social Security 2100 Act.
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