What the bill does

The No Tax on Social Security Act, introduced in Congress, would prevent the federal government from taxing Social Security benefits. Currently, depending on your income level, between 0 and 85 percent of your Social Security payments can be subject to federal income tax. If this bill becomes law, that taxation would stop.

The bill does not change how much Social Security you receive each month. It only changes whether those payments count as taxable income when you file your federal tax return. State taxes on Social Security vary by state and would not be affected by federal legislation.

Key Takeaways

  • The No Tax on Social Security Act would eliminate federal income tax on Social Security benefits if it passes Congress and is signed into law.
  • Currently, up to 85 percent of Social Security income can be taxed federally depending on your total income from other sources.
  • The bill has been introduced multiple times but has not yet become law.
  • Whether you currently pay taxes on Social Security depends on your combined income from wages, investments, and other sources.
  • State tax treatment of Social Security varies and would not change under this federal bill.

How Social Security is taxed right now

Social Security taxation is based on your combined income, which includes your Social Security benefits plus half of any other income you receive. The IRS uses two income thresholds to determine how much of your benefit is taxable.

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, up to 85 percent of your benefits can be taxed. The thresholds are higher for married couples filing jointly ($32,000 to $44,000 for the first tier, over $44,000 for the second), and married couples filing separately face taxation at much lower income levels.

These income thresholds have not changed since 1984, even though the cost of living and typical retirement income have both increased significantly. This means more retirees fall into the taxable range each year, even if their actual spending power has not increased.

Current status of the bill

The No Tax on Social Security Act has been introduced in multiple sessions of Congress but has not yet passed both chambers and been signed into law. The bill typically receives bipartisan support from some members but faces opposition from others who cite budget concerns.

You can check the current status of any bill by visiting Congress.gov and searching for the bill number or title. The site shows whether the bill is still in committee, has been voted on, or has moved to the other chamber. Status changes throughout the year as Congress considers different legislation.

What would change if the bill passes

If the No Tax on Social Security Act becomes law, your Social Security benefits would no longer be included as income on your federal tax return. This would affect your tax liability in two ways: you would not owe federal income tax on the benefits themselves, and your combined income would be lower, potentially affecting other tax calculations.

The change would be automatic — you would not need to take any action or file a different form. The Social Security Administration and the IRS would adjust how benefits are reported on tax documents. However, this would only apply to federal taxes; state taxes on Social Security would remain unchanged in states that currently tax benefits.

States that currently tax Social Security

Thirteen states currently tax Social Security benefits to some degree: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Each state has different rules about which retirees pay tax and at what income levels.

Some states tax Social Security only for higher-income retirees, while others tax it for all recipients. A few states offer exemptions for certain groups, such as military retirees or people below a certain age. The No Tax on Social Security Act would not change state taxation, so residents of these states would still owe state tax on benefits even if the federal bill passes.

How this differs from other tax relief proposals

Other proposals in Congress address Social Security taxation differently. Some bills would raise the income thresholds so fewer people pay tax on benefits. Others would eliminate taxation only for lower-income retirees. The No Tax on Social Security Act takes the broadest approach by removing federal taxation entirely for all recipients.

Some proposals also address the cost-of-living adjustment (COLA) that Social Security receives each year, or the payroll tax cap that determines how much high earners contribute. The No Tax on Social Security Act focuses solely on the taxation of benefits already being paid.

What you should know about your current tax situation

If you receive Social Security, you can find out whether you currently owe tax on your benefits by calculating your combined income or by consulting a tax professional. The IRS provides a worksheet in Publication 915 that walks through the calculation. Many tax software programs also calculate this automatically.

If you have not been paying tax on benefits but think you should be, or vice versa, you can file an amended return for prior years. The IRS generally allows you to amend returns for the past three years. A tax professional or your local IRS office can help you determine whether an amended return makes sense for your situation.

Frequently Asked Questions

Does the bill change how much Social Security I receive each month?

No. The bill only affects whether your benefits are taxed federally. Your monthly payment amount stays the same. The bill does not change benefit calculations, cost-of-living adjustments, or may be able to access rules.

If this bill passes, will I owe state taxes on Social Security?

That depends on your state. Thirteen states currently tax Social Security benefits. A federal bill would not change state tax rules, so residents of those states would still owe state tax even if federal taxation ends. Check your state's tax agency website to see whether your state taxes benefits.

How do I know if I currently pay federal tax on Social Security?

You pay tax on Social Security if your combined income (benefits plus half of other income) exceeds $25,000 for single filers or $32,000 for married couples filing jointly. Use the worksheet in IRS Publication 915 or ask a tax professional to calculate your exact amount.

When will this bill become law?

The bill has not yet passed Congress. You can track its progress on Congress.gov. Bills can take months or years to move through committees and votes, and many bills are introduced but never become law.

What should I do now about my Social Security taxes?

Continue filing your taxes as you normally do. If the bill passes, the IRS and Social Security Administration will communicate changes to how benefits are reported. You do not need to take action in advance or wait to file your current return.