What 2025 or 2026 federal bills propose changes to Social Security taxation?
Executive summary
Several 2025–2026 federal proposals and enacted laws touch Social Security taxation: enacted 2025 legislation called the “One Big Beautiful Bill” (OBBB) created a new $6,000 senior deduction that reduces how many beneficiaries pay federal tax on benefits, while separate enacted law, the Social Security Fairness Act, repealed WEP/GPO and raised some payments [1] [2]. Multiple bills were introduced in 2025 seeking to eliminate federal income tax on Social Security benefits—most prominently the You Earned It, You Keep It Act and companion House/Senate proposals such as H.R.904 and sponsorships by Rep. Josh Riley—proposing to end taxation beginning in 2026 and offset revenue by raising the payroll tax cap [3] [4] [5] [6].
1. What actually changed in 2025: a new senior deduction, not a literal repeal
Congress enacted a 2025 tax package that created an enhanced deduction of roughly $6,000 for taxpayers 65 and older; that deduction applies to overall taxable income and, combined with higher standard deductions, will reduce the number of beneficiaries who pay federal tax on Social Security benefits but does not change the statutory rules that determine when benefits are included in gross income [1] [7] [8]. Administrations and agencies touted that “nearly 90%” of beneficiaries will pay no federal income tax under the new law, but independent reporting and tax analysts say the underlying taxation rules remain intact and the benefit comes through the deduction and higher standard deduction, not a repeal of Social Security’s income-tax rules [9] [10] [8].
2. Bills seeking full repeal or elimination of federal taxation (2025–2026 proposals)
Legislators introduced multiple bills in 2025 that would go farther than the OBBB deduction. The “You Earned It, You Keep It Act” (reintroduced in 2025 by Sen. Ruben Gallego and Rep. Angie Craig and with related House sponsorships) and other House measures such as H.R.904 explicitly aim to exclude Social Security and Tier I railroad retirement benefits from gross income—effectively eliminating federal income tax on those benefits [5] [11] [4]. Rep. Josh Riley publicly cosponsored a version of the You Earned It, You Keep It Act that would eliminate federal taxes on Social Security starting in 2026 and propose funding offsets like raising the payroll tax cap [4] [6].
3. How proponents propose to pay for repeal: payroll-tax cap changes
Proposals to repeal benefit taxation typically include offsets. Several summaries and local reporting note plans to lift or eliminate the Social Security payroll-tax cap so higher earners pay more into OASDI to offset lost revenue from ending benefit taxation [6] [12]. Analysts warn that total elimination of benefit taxation would be costly; independent budget models estimate very large revenue losses if benefits were simply untaxed without offsets [10]. Available sources do not provide a single, detailed, scored offset package that has passed Congress to fully fund a repeal.
4. Solvency and fiscal context: trade-offs and unanswered questions
The Social Security Administration and budget analysts highlight trade-offs: removing taxation on benefits reduces federal revenue and could pressure the trust funds without offsetting revenue changes [10] [8]. The SSA also continues to publish long-range option lists about taxing benefits and the financial effects of different approaches; those long-term solvency analyses are relevant but do not substitute for enacted offsets [11]. Available sources do not report a final Congressional score showing the net fiscal effect of combining OBBB’s deduction with any enacted repeal bill.
5. Practical impact for beneficiaries in 2026 filing season
For tax year 2025 returns filed in 2026, most seniors will see the effect of the new senior deduction and higher standard deduction that likely reduces taxable Social Security income for many; but unless Congress passes an explicit repeal, the statutory thresholds and provisional income rules that determine whether benefits are taxed remain unchanged [1] [8] [13]. If Congress enacts a repeal like You Earned It, You Keep It, proponents expect it to take effect for 2026 returns, but that outcome remains legislative, not automatic [4] [12].
6. Competing narratives and media confusion
Federal agencies and presidential communications framed OBBB as eliminating taxes for “most beneficiaries,” while tax reporters, legal analysts and outlets such as Kiplinger, CBS and Thomson Reuters warned that messaging overstated the mechanism: the new law reduces taxable income via a deduction rather than changing how Social Security benefits are defined in IRC Sec. 86 [9] [5] [8]. Readers should treat administration claims about “elimination” as shorthand for the combined net effect of deductions and thresholds rather than a technical repeal unless and until Congress enacts a bill like H.R.904 or the You Earned It, You Keep It Act [10] [5].
Limitations and next steps: this summary uses the provided reporting and bill texts; available sources do not include a finalized Congressional Budget Office score for a full repeal package, nor do they report that a repeal bill has become law—only that deduction changes were enacted and repeal bills are pending [1] [3] [4]. For readers tracking immediate tax filing consequences, consult IRS guidance and your tax preparer about applying the 2025 senior deduction on 2025 returns filed in 2026 [1] [8].