A new bill in Congress aims to eliminate federal taxes on Social Security benefits permanently, benefiting millions of retirees. The You Earn It, You Keep It Act would also require higher earners to contribute more to strengthen the program’s trust funds. Rep. Angie Craig and Sen. Ruben Gallego introduced the legislation in 2024 and 2025, respectively. Currently, retirees may owe federal income tax on their Social Security benefits based on their combined income. Individuals with $25,000 to $34,000 in combined income may pay tax on up to 50% of benefits, while higher earners above $34,000 for singles or $44,000 for couples may pay tax on up to 85% of their benefits. Sen. Gallego’s legislation would eliminate federal taxes on Social Security benefits and expand the Social Security payroll tax to apply to annual wages above $250,000. The change is projected to extend the program’s ability to pay full benefits until 2058, 24 years beyond the current projection of 2034. Several senior advocacy groups support the bill, emphasizing the importance of eliminating federal taxes on Social Security benefits for older Americans. The bill has reignited the debate on whether Social Security benefits should be taxed for retirees who have contributed throughout their lives.

Read more at Yahoo Finance: New Bill Would End Taxes On Social Security Benefits