What the No Tax on Social Security Act proposes
The No Tax on Social Security Act is a bill introduced in Congress that would eliminate federal income tax on Social Security benefits. Under current law, up to 85% of your Social Security income can be taxed as ordinary income if your combined income exceeds certain thresholds. This bill would remove that tax entirely, meaning all Social Security payments would arrive tax-free.
The bill has been introduced multiple times in recent years but has not become law. It remains a proposal rather than a change to how Social Security currently works. Understanding what it would do — and what the current rules are — helps you plan around the tax situation as it exists today.
Key Takeaways
- The No Tax on Social Security Act would eliminate federal income tax on all Social Security benefits if it passed, but it is not currently law.
- Today, up to 85% of your Social Security can be taxed if your combined income (Social Security plus other earnings and investment income) exceeds $25,000 for single filers or $32,000 for married couples filing jointly.
- The tax applies in two tiers: 50% of benefits are taxable if you exceed the first threshold, and up to 85% are taxable if you exceed the second threshold.
- Even if the bill passes in the future, it would not retroactively refund taxes you already paid on Social Security in previous years.
How Social Security is taxed right now
Your Social Security benefits may be subject to federal income tax depending on your combined income, which the IRS calculates as your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. The tax applies in two brackets.
If you are a single filer and your combined income is between $25,000 and $34,000, up to 50% of your benefits are taxable. If your combined income exceeds $34,000, up to 85% of your benefits are taxable. For married couples filing jointly, the first threshold is $32,000 and the second is $44,000. These thresholds have not changed since 1984.
Not all of your benefits are automatically taxed at the higher rate. The IRS uses a formula to calculate the exact amount, and the result depends on how much other income you have. A person with combined income just above $25,000 might owe tax on only a small portion of benefits, while someone with much higher income could owe tax on close to 85%.
What would change if the bill became law
If the No Tax on Social Security Act passed, the entire taxation structure would disappear. You would report your Social Security benefits on your tax return, but none of it would be counted as taxable income. This would lower your federal tax bill in retirement, assuming you currently pay tax on your benefits.
The change would affect people across different income levels differently. Someone with $50,000 in combined income today might owe tax on 85% of their benefits; under the bill, that tax would vanish. Someone with combined income below $25,000 would see no change, since they pay no tax on benefits currently.
The bill would not affect state income tax. Some states tax Social Security benefits and some do not, regardless of federal law. A change to federal tax would not automatically change state treatment.
Current status of the bill in Congress
The No Tax on Social Security Act has been introduced in multiple Congressional sessions but has not passed into law. Bills are introduced, debated, and often die in committee without a vote. Even when a bill has bipartisan support, passage is not may provide.
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 in committee, has been voted on, or has moved to another stage. This is the official source for tracking legislation.
Because the bill is not law, you should plan your retirement taxes based on the rules that exist today, not on the assumption that this bill will pass. Tax planning that depends on a future change in law is risky.
How to reduce Social Security taxes under current law
While you wait to see whether the bill passes, you can take steps to lower the amount of your benefits that are taxed. The key is reducing your combined income, which includes half of your Social Security benefits plus all other income.
One strategy is to delay claiming Social Security. If you claim at 62, your annual benefit is smaller than if you claim at 67 or 70, which means your combined income is lower in the years you delay. This can push you below the tax thresholds or reduce the percentage of benefits that are taxed.
Another approach is to manage other income sources. If you have investment income, you might time the sale of assets to spread gains across multiple years rather than realizing a large gain in one year. If you have a choice about when to take distributions from retirement accounts, you can coordinate that timing with your Social Security claim to keep combined income as low as possible in any single year.
Some people move to states with no income tax to avoid state taxation of benefits, though this does not affect federal tax. The federal thresholds remain the same regardless of where you live.
The difference between this bill and other Social Security proposals
Congress has introduced many bills related to Social Security over the years. Some propose raising the payroll tax cap, which would increase how much high earners pay into the system. Others propose raising the full retirement age or changing the benefit formula. The No Tax on Social Security Act is narrower — it addresses only the taxation of benefits that are already being paid, not the structure of the program itself.
This bill does not change how much Social Security you receive, when you can claim, or how benefits are calculated. It changes only whether the federal government taxes the money after you receive it.
Frequently Asked Questions
If this bill passes, will I get a refund for taxes I already paid on Social Security?
No. Tax bills passed by Congress are generally not retroactive. If the No Tax on Social Security Act becomes law, it would explore to benefits received going forward, not to taxes you paid in previous years. You would not receive a refund for past tax years.
Does this bill affect Medicare premiums?
Medicare premiums are based partly on your income, and income calculations for Medicare purposes may differ from income calculations for tax purposes. The bill as written addresses only federal income tax on benefits, not Medicare premium calculations. However, if the bill passed and lowered your reported income, that could affect Medicare premium determinations in future years.
Would state income tax on Social Security change if this bill passed?
No. State tax law is separate from federal tax law. Some states tax Social Security and some do not, based on their own rules. A change to federal taxation would not automatically change how your state treats Social Security income. You would need to check your state's rules.
Can I plan my retirement assuming this bill will pass?
It is not advisable. Bills are introduced in Congress regularly and most do not become law. Tax planning should be based on the rules that exist today, not on proposed changes. If the bill does pass, you can adjust your strategy at that time, but planning around a bill that may never pass creates unnecessary risk.