New Bill Aims to Eliminate Taxes on Social Security Benefits

Washington, D.C. – Senator Ruben Gallego, D-Arizona, introduced a new bill on Thursday aimed at eliminating federal taxes on Social Security benefits for all beneficiaries. Titled the You Earn It, You Keep It Act, the legislation seeks to provide financial relief for those who depend on Social Security income.

This move responds to ongoing concerns about the unfair tax burden on seniors. Currently, up to 85% of Social Security benefits can be subject to federal taxes based on a recipient’s combined income, which includes adjusted gross income and half of their Social Security income. Individuals and couples with combined incomes above specified thresholds may see a significant portion of their benefits taxed.

“Despite paying into the system for decades, seniors are still forced to pay taxes on their hard-earned benefits. Meanwhile, the ultra-wealthy often escape contributing,” Gallego said in a statement. His proposal aims not only to eliminate taxes on Social Security benefits but also to adjust the Social Security payroll tax, applying it to annual earnings over $250,000.

The introduction of Gallego’s bill comes on the heels of another measure, the One Big Beautiful Bill Act, signed into law by former President Donald Trump. This act includes a temporary $6,000 tax deduction for seniors aged 65 and older, valid from 2025 to 2028, aimed at providing some financial relief but not fully addressing the taxation of Social Security benefits.

Shannon Benton, Executive Director of The Senior Citizens League, expressed support for Gallego’s proposal, calling it a “commonsense step” that would ensure seniors retain more of their benefits. Her organization has been advocating for changes to the current tax laws regarding Social Security.

As reported by Social Security’s trustees, the program faces a potential trust fund shortfall, with predictions that benefits may be reduced in the next decade without legislative changes. The You Earn It, You Keep It Act could extend the trust fund’s ability to pay benefits in full until 2058.

Gallego’s proposal now heads to the Senate for consideration. Meanwhile, the corresponding House version introduced by Representative Angie Craig, D-Minnesota, is currently under review by committees.