Social Security Income Tax Elimination Update

Approximately 50% of retirees pay taxes on their Social Security benefits, compared to less than 10% in 1984!

Thomas Massie (R-KY) reintroduced H.R. 1040, the Senior Citizens Tax Elimination Act. It was referred 02/06/2025 to the House Committee on Ways and Means. This bill assists seniors by eliminating the double tax on Social Security benefits. This bill supports President Trump’s campaign to eliminate this unfair tax for seniors.

Representative Daniel Webster (R-FL) co-sponsored this legislation, stating, “For decades, seniors have paid into Social Security with their tax dollars. Now, when many seniors are on a fixed income and struggling financially, they are being double-taxed because of income taxes on their Social Security benefits.

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As the Congressional Research Service reports, “Before 1984, Social Security benefits were exempt from federal income tax. Congress then enacted legislation to tax a portion of those benefits, with the share gradually increasing as a person’s income rose above a specified income threshold.”

Today, up to 85 percent of a senior’s Social Security benefits are taxable under this draconian law. They should expand this proposal to eliminate the Income Required Monthly Adjustment Amounts (IRMAA) that apply to Medicare Part B and D payments. Why should many seniors pay up to four times more for the same benefit?

If passed, this act would amend the Internal Revenue Code of 1986 to terminate the inclusion of tier I railroad retirement benefits and Social Security benefits in an individual’s gross income starting in 2025 (tax returns filed in early 2026).

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Alternative Proposal

The Reducing Excessive Taxation and Inefficiencies by Reforming Elder Exemptions to Support Fairness, Inflation Relief, and Simple Taxes (RETIREES FIRST) Act was introduced by U.S. Senators Roger Marshall and Marsha Blackburn, proposes significant changes to Social Security taxation, promising financial relief for millions of retirees. This proposal dramatically raises the income thresholds as noted below:

Raising the provisional income threshold to $34,000 for single filers and $68,000 for married filers. (the provisional income threshold for single fliers is presently $25,000 and $32,000 for married filers)
Updating the thresholds annually to prevent bracket creep and protect retirees from inflation’s impact.
Simplifying tax rules to maintain a single 85 percent inclusion rate for benefits exceeding the new thresholds, simplifying the filing process, and reducing confusion for seniors.

Summary

These bills are long overdue. They will hopefully be reconciled and make it to the floor for a vote. Both bills require revenue neutrality; other government-wide cuts would make up the difference. With DOGE finding excessive spending, waste, and abuse in other government agencies, there should be more than sufficient funds to compensate for any lost funds.

One reason the WEP and GPO programs were repealed is the tens of thousands of phone calls that constituents made to their representatives. This week, I intend to call mine to express my support for these bills.

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Helpful Retirement Planning Tools

Federal employees who are retiring soon and recent retirees with security clearances
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Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, investment, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center.

Over time, various dynamic economic factors relied upon as a basis for this article may change. The information contained herein should not be considered investment advice and may not be suitable for your situation. This service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Dennis Damp

Dennis V. Damp is an author, retired federal manager, business owner, career counselor and veteran. Damp is the author of 28 books, a recognized benefits expert, and a retired federal manager with 35 years’ service. Dennis has been a guest on hundreds of radio talk shows, CNN’s YOUR MONEY and the Lou Dobbs Cable TV shows, lectured at universities and colleges, produced Internet web sites and training videos, and has written hundreds of articles for national magazines and newspapers. His books have been featured in the Wall Street Journal, Washington Post, New York Times and U.S. News & World Report.

Dennis joined the Air Force in 1968 and spent over three years on active duty and an additional seven years with the Air National Guard. He was hired by the Department of Defense (DOD) after leaving active duty and transferred to the Federal Aviation Administration (FAA) in 1975. He spent the remainder of his career in various positions with the FAA. His last position was technical operations manager at the Pittsburgh International Airport’s air traffic control tower.