Summary of Provisions That Would Change the Social Security Program
Description of Proposed Provisions:
Provisions Affecting Taxation of Benefits
Estimates based on the intermediate assumptions of
the 2025 Trustees Report
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|
Change from current law [percent of payroll] |
Shortfall eliminated | |||||
|---|---|---|---|---|---|---|
|
Long-range actuarial balance |
Annual balance in 75th year |
Long-range actuarial balance |
Annual balance in 75th year |
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| Current law shortfall in long-range actuarial balance is 3.82 percent of payroll and in annual balance for the 75th year is 4.84 percent of payroll. | ||||||
| H2 |
Starting in 2026, tax Social Security benefits in a manner similar to private pension income. Phase out the lower-income thresholds during 2026-2045.
graph | table | pdf-graph | pdf-table | memo (Warshawsky 2008) |
0.21 | 0.18 | 5% | 4% | |
| H4 |
Increase the threshold for taxation of OASDI benefits to $50,000 for single filers and $100,000 for joint filers starting in 2027. Taxation of benefits revenues transferred to the Hospital Insurance (HI) Trust Fund would be the same as if the current-law computation applied.
graph | table | pdf-graph | pdf-table | memo (Larson 2015) | memo (Larson 2014) |
-0.10 | -0.01 | -2% | -0% | |
| H5 |
Beginning in 2032, for single/head-of-household/married-filing-separate taxpayers with MAGI of $250,000 or more and joint filers with MAGI of $500,000 or more, include up to the remaining 15 percent of Social Security benefits in taxable income (increased from up to 85 percent of benefits taxable under current law). In subsequent years, update these thresholds for growth in wages (AWI). Revenue from this provision would be credited to the Social Security trust funds. Current law taxation of up to 85 percent of Social Security benefits would remain unchanged.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.02 | 0.02 | 0% | 0% | |
| H6 |
Eliminate federal income taxation of OASDI benefits that is credited to the OASI and DI Trust Funds for 2054 and later. Phase out OASDI taxation of benefits by increasing relevant "income" thresholds from 2045 through 2053 as follows, for single/joint tax filers: (a) 2045 = $32,500/$65,000; (b) 2046 = $40,000/$80,000; (c) 2047 = $47,500/$95,000; (d) 2048 = $55,000/$110,000; (e) 2049 = $62,500/$125,000; (f) 2050 = $70,000/$140,000; (g) 2051 = $77,500/$155,000; (h) 2052 = $85,000/$170,000; and (i) 2053 = $92,500/$185,000. Taxation of benefits revenues for the Hospital Insurance (HI) Trust Fund would be maintained at the same level as if the current-law computation applied.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
-0.64 | -1.12 | -17% | -23% | |
| H7 |
Replace the current-law thresholds for federal income taxation of OASDI benefits with a single set of thresholds at $50,000 for single filers and $100,000 for joint filers for taxation of up to 85 percent of OASDI benefits, effective for tax year 2027. These thresholds would be fixed and not indexed to price inflation or average wage increase. Reallocate a portion of revenue from taxation of OASDI benefits to the HI Trust Fund such that the HI Trust Fund would be in the same position as if the current-law computation (in the absence of this provision) applied. The net amount of revenue from taxing OASDI benefits, after the allocation to HI, would be allocated to the combined Social Security Trust Fund.
graph | table | pdf-graph | pdf-table | memo (Larson, Blumenthal, Van Hollen September 2019) | memo (Larson, Blumenthal, Van Hollen January 2019) | memo (Larson 2017) |
-0.15 | -0.01 | -4% | -0% | |
| H8 |
Place all proceeds from taxation of Social Security benefits, including retrospective benefits, into the OASI and DI Trust Funds beginning on January 1, 2028.
graph | table | pdf-graph | pdf-table | memo (Hoyer, Primus January 2025) |
0.90 | 0.93 | 24% | 19% | |
| H9 |
Apply Federal income tax to all Social Security benefits for all beneficiaries with incomes above $100,000 for individual filers and $125,000 for joint filers, effective in 2028. These thresholds increase by CPI for years after 2028. Revenue from this provision would be credited to the Social Security trust funds.
graph | table | pdf-graph | pdf-table| memo (Hoyer, Primus January 2025) |
0.16 | 0.24 | 4% | 5% | |