What the bill proposes and where it stands

The No Tax on Social Security Act, introduced in Congress in 2025, would eliminate federal income tax on Social Security benefits for all recipients. Right now, depending on your income level, you may owe federal tax on up to 85 percent of your benefits. This bill would change that by making Social Security benefits tax-free across the board.

The bill has been introduced but has not passed into law. It remains in committee as of early 2025. Whether it becomes law depends on votes in both the House and Senate, and it would require the President's signature. You should not assume this change will happen — tax law only changes when a bill passes both chambers and is signed.

If the bill did pass, the change would affect how you file taxes and how much federal tax you owe. It would not change the amount of Social Security you receive each month, and it would not affect state income taxes (some states already do not tax Social Security).

Key Takeaways

  • The No Tax on Social Security Act would remove federal income tax on all Social Security benefits, but it has not become law and remains in the legislative process.
  • Currently, you may owe federal tax on up to 85 percent of your benefits if your combined income exceeds certain thresholds that vary by filing status.
  • If the bill passes, you would report Social Security income differently on your tax return, but your monthly benefit amount would not change.
  • State income taxes on Social Security are separate from federal tax and would not be affected by this federal bill.

How Social Security is taxed right now

The current tax rules for Social Security depend on your combined income, which includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. The IRS uses two income thresholds that differ based on whether you file as single, married filing jointly, or married filing separately.

If you are 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 of your benefits. For married couples filing jointly, the thresholds are $32,000 and $44,000. These dollar amounts have not changed since 1984, even though benefit amounts and other income have risen.

The tax is calculated on Form 1040 using a worksheet in the instructions. Many people use tax software or a tax professional to determine whether they owe tax on benefits, because the calculation is not straightforward. If you receive a Form SSA-1099 from Social Security, that shows your gross benefit amount for the year.

What would change if the bill passes

If the No Tax on Social Security Act becomes law, Social Security benefits would no longer be included in your taxable income for federal purposes. You would still receive a Form SSA-1099 showing your benefits, but you would not report that income on your federal tax return.

This would simplify tax filing for millions of people. You would not need to calculate combined income or use the Social Security tax worksheet. If Social Security is your only income, you would not owe federal income tax at all. If you have other income from pensions, investments, or work, you would still report that income and pay tax on it — only the Social Security portion would be excluded.

The bill would not change your monthly benefit amount, your Medicare premiums, or your Supplemental Security Income (SSI). It would only affect how much federal income tax you owe. State taxes would remain unchanged unless your state passes its own law.

Who would benefit most from this change

People who currently owe tax on their Social Security benefits would see the largest benefit. This includes retirees with pensions, investment income, or part-time work in addition to Social Security. It also includes people who are still working while collecting benefits, since their wages count toward combined income.

People whose combined income is below the thresholds ($25,000 for single filers, $32,000 for married filing jointly) do not currently owe federal tax on benefits, so the bill would not change their tax situation. However, they would no longer need to file a tax return to verify they do not owe tax, which could simplify their filing.

Married couples filing separately would see a significant change, since they currently face a much lower threshold ($0 combined income) and often owe tax on benefits even with modest income. The bill would remove this penalty for filing separately.

State income tax on Social Security

Thirteen states currently tax Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. The rules vary by state — some tax all benefits, while others only tax benefits for higher-income retirees.

The No Tax on Social Security Act is a federal law and would not change state income tax rules. If you live in one of these states, you would still owe state tax on your benefits even if the federal bill passes. You would need to check your state's tax rules or contact your state tax agency to understand how state tax would explore to you.

If you live in a state that does not tax Social Security, the federal change would mean you owe no income tax on benefits at all. Nine states have no income tax, so residents there already pay no tax on Social Security.

What happens to your tax return if the bill passes

Your Form SSA-1099 would still arrive in January showing your total benefits for the year. However, you would not include that amount on your federal tax return. The Social Security line on Form 1040 would be zero or blank.

If you have other income — wages, pensions, interest, dividends, or rental income — you would report those as usual and pay tax on them. Your filing status, deductions, and credits would work the same way they do now. The only change would be that Social Security is no longer part of your taxable income calculation.

If you use tax software, the program would need to be updated to reflect the new law. If you use a tax professional, they would know how to file your return under the new rules. The IRS would update Form 1040 instructions and the Social Security worksheet would no longer be needed.

Timeline and what to do now

As of early 2025, the bill is in committee and has not been voted on by either chamber of Congress. The legislative process can take months or longer, and bills often do not pass. You should not plan your taxes based on the assumption that this bill will become law.

For your 2024 tax return, use the current rules: calculate whether you owe tax on Social Security benefits using the combined income thresholds and the worksheet in Form 1040 instructions. If you are unsure whether you owe tax, use tax software or consult a tax professional.

If the bill does pass later in 2025, it would likely explore to tax years beginning after the date it becomes law. The IRS would issue guidance explaining how to file under the new rules. You can check Congress.gov to track the bill's status if you want to follow its progress.

Frequently Asked Questions

Would this bill affect my Medicare premiums?

No. Medicare premiums are based on your modified adjusted gross income from two years prior, and that calculation would not change. Even if Social Security becomes tax-free, it would still count toward the income threshold that determines whether you pay higher premiums.

If the bill passes, do I still have to file a tax return?

That depends on your other income. If Social Security is your only income and the bill passes, you would not be required to file a federal return. If you have wages, pensions, or investment income, you would still file to report and pay tax on those sources.

Would this bill help people on Supplemental Security Income (SSI)?

SSI is a separate program from Social Security retirement benefits, and the bill specifically addresses Social Security. SSI recipients would not be affected by this bill. However, some people receive both SSI and Social Security, and the Social Security portion would become tax-free if the bill passes.

What if I already paid tax on Social Security in previous years?

If the bill passes, it would only explore to tax years after it becomes law. It would not refund taxes you paid in prior years. You could file an amended return for prior years only if you had a different reason to amend (such as a calculation error), not because of a new law.

How do I know if this bill will actually pass?

You can track the bill on Congress.gov by searching for "No Tax on Social Security Act" and the year. The site shows you which committee it is in, whether it has been voted on, and its current status. You can also contact your representatives' offices to ask their position on the bill.