No Tax on Social Security
H.R. 904, titled the No Tax on Social Security Act, would repeal the federal income tax treatment of Social Security benefits. Specifically, it would terminate the treatment of Social Security benefits as part of gross income, effectively making Social Security benefits fully excluded from federal income taxation for tax years beginning after enactment. To offset the resulting loss of revenue, the bill would provide a “hold harmless” appropriation from the U.S. Treasury to the Social Security Act funds (including the Federal Hospital Insurance Trust Fund) and the Railroad Retirement Act funds equal to the reduction in transfers to those funds caused by the repeal. In short, the bill aims to eliminate federal taxes on Social Security benefits while protecting the trust funds from short-term revenue disruptions.
Key Points
- 1Repeal of tax on Social Security benefits: The bill adds a termination provision to Section 86, removing Social Security benefits from being included in gross income for taxable years beginning after enactment.
- 2Effective date: The repeal would apply to taxable years beginning after the date of enactment (i.e., the first tax year that starts after enactment).
- 3Hold harmless mechanism: For each fiscal year, the bill would appropriate an amount from the Treasury to each Social Security Act fund (including HI) and Railroad Retirement Act funds to offset the reduction in transfers to those funds caused by the repeal.
- 4Short title: The act is named the “No Tax on Social Security.”
- 5Legislative status: Introduced in the 119th Congress and referred to the Ways and Means Committee; no further action or final passage indicated in the text provided.