A new proposed federal law aims to erase federal income taxes on Social Security benefits starting next year. The development has come as a huge sigh of relief for millions of retirees in the United States of America.
The legislation would represent a major shift in tax policy as retirees would no longer have to worry about part of their Social Security being taxed at certain income levels. The change is potentially transformative for millions, especially those living on fixed incomes.
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"Seniors paid into Social Security their entire lives. It doesn't make any sense to tax them on the benefits they earned," Riley said. "This common-sense bill will deliver a tax cut to seniors and strengthen Social Security for future generations."
To make up for the revenue lost from eliminating these taxes, the proposal calls for increasing the payroll tax wage base. At present, Social Security payroll tax applies only to earnings up to roughly $176,100 in 2025. Under the new bill, wages above $250,000 would once again be subject to the tax.
Middle-income retirees, who tend to rely heavily on Social Security and have historically seen portions of their benefits taxed, stand to benefit most from the repeal. Meanwhile, higher-income workers would contribute more into the system under the updated payroll tax scheme.
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Up to 85% of Social Security benefits can currently be taxed if income surpasses specific thresholds. The new proposal would eliminate that system for federal taxes, meaning beneficiaries would no longer need to calculate combined income to determine whether a portion of their benefits is taxable. If enacted, nearly 90% of Social Security recipients would receive tax relief under the plan.
Advocates argue this proposal would offer noticeable relief for retirees next year, improving economic stability in retirement for those already stretching budgets. On the other hand, opponents have raised concerns about the fiscal implications of such a move, including how Social Security's long-term solvency might be affected and whether other income tax burdens might shift.
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Social Security September payments
Another round of Social Security payment is expected to continue this month which benefits millions of US citizens. The program provides great help to maintain economic stability, after having met the requirements to receive it. Social Security payments also include Social Security Disability Insurance (SSDI), which is paid in the first days of the month and is also very important for citizens.
The payment round already began in September and these are the beneficiaries who have already received their payments:
Beneficiaries receiving payments since before May 1997.
Beneficiaries with birthdays between the 1st and 10th of each month.
Beneficiaries whose birthdays are between the 11th and 20th of any month.
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The legislation would represent a major shift in tax policy as retirees would no longer have to worry about part of their Social Security being taxed at certain income levels. The change is potentially transformative for millions, especially those living on fixed incomes.
No taxes on Social Security benefits?
The 'You Earned It, You Keep It Act' bill has been introduced by Rep. Josh Riley (D-NY) and has gathered support from others including fellow lawmakers and advocacy groups, reports Marca. The proposal would "eliminate federal taxes on Social Security benefits starting in 2026", according to an official news release. The idea is to allow retirees to retain more of what they've already paid into the system without hitting tax burdens in retirement.ALSO READ: 'Everything is frozen for you': Macron dials Trump as he is stranded on New York street. Watch video
"Seniors paid into Social Security their entire lives. It doesn't make any sense to tax them on the benefits they earned," Riley said. "This common-sense bill will deliver a tax cut to seniors and strengthen Social Security for future generations."
To make up for the revenue lost from eliminating these taxes, the proposal calls for increasing the payroll tax wage base. At present, Social Security payroll tax applies only to earnings up to roughly $176,100 in 2025. Under the new bill, wages above $250,000 would once again be subject to the tax.
Middle-income retirees, who tend to rely heavily on Social Security and have historically seen portions of their benefits taxed, stand to benefit most from the repeal. Meanwhile, higher-income workers would contribute more into the system under the updated payroll tax scheme.
When does social security become taxable?
According to the current law, social security benefits become taxable depending on "combined income," a formula that includes a person's adjusted gross income, certain nontaxable interest, and half of their Social Security benefits. It is pertinent to note that the bill does not affect state taxes, which may still apply in some states.ALSO READ: Tyler Robinson’s ‘sickening’ online searches exposed; Charlie Kirk shooter played bizarre ‘Furry Shades of Gay’ game
Up to 85% of Social Security benefits can currently be taxed if income surpasses specific thresholds. The new proposal would eliminate that system for federal taxes, meaning beneficiaries would no longer need to calculate combined income to determine whether a portion of their benefits is taxable. If enacted, nearly 90% of Social Security recipients would receive tax relief under the plan.
Advocates argue this proposal would offer noticeable relief for retirees next year, improving economic stability in retirement for those already stretching budgets. On the other hand, opponents have raised concerns about the fiscal implications of such a move, including how Social Security's long-term solvency might be affected and whether other income tax burdens might shift.
ALSO READ: D4vd to be arrested after Celeste Rivas' decomposed body discovered in his Tesla? New details emerge
Social Security September payments
Another round of Social Security payment is expected to continue this month which benefits millions of US citizens. The program provides great help to maintain economic stability, after having met the requirements to receive it. Social Security payments also include Social Security Disability Insurance (SSDI), which is paid in the first days of the month and is also very important for citizens.The payment round already began in September and these are the beneficiaries who have already received their payments:
Beneficiaries receiving payments since before May 1997.
Beneficiaries with birthdays between the 1st and 10th of each month.
Beneficiaries whose birthdays are between the 11th and 20th of any month.
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Will you get social security payment on Sept 24?
Beneficiaries whose birthdays are between the 21st and 31st of any month will receive their payment on September 24. Retirees, Social Security Disability Insurance (SSDI), survivors which include spouses, ex-spouses and children of a deceased worker, family members of a beneficiary Supplemental Security Income (SSI) are beneficiaries.Add 
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