The bill did not pass Congress

The No Tax on Social Security Act has been introduced in Congress multiple times but has not become law. The most recent version was introduced in 2023, but it did not advance to a vote in either the House or Senate. Without passage through both chambers and a presidential signature, no change to how Social Security income is taxed has taken effect.

Social Security benefits remain taxable income under current law for people whose total income exceeds certain thresholds. Those thresholds have not changed since 1984, which is why the bill keeps being reintroduced — supporters argue the limits are outdated and catch more retirees in taxation than originally intended.

Key Takeaways

  • The No Tax on Social Security Act has been introduced in Congress but has not passed into law as of 2024.
  • Under current law, Social Security benefits are taxable if your combined income exceeds $25,000 (single filers) or $32,000 (married filing jointly).
  • The income thresholds that determine taxation have remained the same since 1984 and are not adjusted for inflation.
  • If the bill had passed, it would have eliminated federal taxation of Social Security benefits entirely, but this change has not occurred.

How Social Security is currently taxed

Right now, up to 85 percent of your Social Security benefits can be subject to federal income tax, depending on your total income. The IRS uses a formula based on your combined income, which includes adjusted gross income, nontaxable interest, and half of your Social Security benefits.

If you file as single and your combined income is between $25,000 and $34,000, you may owe tax on up to 50 percent of your benefits. If your combined income exceeds $34,000, you may owe tax on up to 85 percent. For married couples filing jointly, the thresholds are $32,000 and $44,000.

These thresholds were set in 1984 and have never been adjusted for inflation. That means more retirees fall into the taxable range each year, even if their actual purchasing power has not changed.

What the No Tax on Social Security Act would have done

The bill would have removed all federal income tax on Social Security benefits. Under the proposed law, no portion of your Social Security income would count as taxable income to the IRS, regardless of how much other income you receive.

The bill would not have changed state taxation of Social Security. Thirteen states currently tax Social Security benefits to some degree, and those state taxes would remain in place if the federal bill had passed.

The bill also would not have changed how Medicare premiums are calculated. Your Social Security income still affects what you pay for Medicare Part B and Part D, and that relationship would have continued even if the bill had passed.

Why the bill has not passed

Congress has introduced versions of the No Tax on Social Security Act in multiple sessions, but none has gained enough support to move forward. The bill faces opposition from lawmakers concerned about federal revenue loss and from those who argue that higher-income retirees should continue paying tax on benefits.

The bill also competes with other Social Security proposals in Congress, including bills to increase benefits, raise the payroll tax cap, or adjust the cost-of-living adjustment formula. With limited legislative time and competing priorities, individual bills often do not reach a vote.

What you should do now if you pay tax on Social Security

If you receive Social Security and pay federal income tax on your benefits, you have a few options to reduce your tax burden under current law. You can adjust your withholding from your benefits by filing Form W-4V with Social Security, which tells them to hold back a percentage of each payment for taxes.

You can also make estimated tax payments to the IRS if you prefer to pay in quarterly installments rather than having money withheld from your check. Some people reduce their combined income by maximizing contributions to traditional IRAs or by timing when they claim other income.

A tax professional or CPA can review your specific situation and show you which strategies might lower your tax on Social Security benefits under the rules that currently exist.

State taxes on Social Security

Even though the federal No Tax on Social Security Act did not pass, some states have already eliminated or reduced taxation of Social Security benefits. Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia tax Social Security to varying degrees, but many other states do not tax it at all.

If you live in a state that taxes Social Security, you may want to check your state tax return to see whether you owe state income tax on your benefits. State rules differ from federal rules, so you may owe state tax even if you do not owe federal tax, or vice versa.

Frequently Asked Questions

Will the No Tax on Social Security Act ever pass?

It is possible but not certain. The bill would need to pass both the House and Senate and be signed by the president. Support for the bill varies depending on which Congress is in session and which party holds the majority. No timeline for passage exists.

If I do not owe federal income tax, do I still have to report my Social Security?

You must report your Social Security benefits on your tax return if your combined income exceeds the threshold for your filing status, even if you do not owe tax. If your combined income is below the threshold, you generally do not need to report it.

Can I avoid paying tax on Social Security by moving to another state?

Moving to a state that does not tax Social Security can reduce your state tax burden, but it does not change your federal tax obligation. You would still owe federal income tax on your benefits under current law. State residency rules vary, so consult a tax professional before moving for tax reasons.

Does the No Tax on Social Security Act affect Medicare premiums?

No. Even if the bill had passed, your Social Security income would still be used to calculate your Medicare Part B and Part D premiums. The bill only addressed federal income taxation, not premium calculations.