The bill did not pass Congress

The No Tax on Social Security Act has not become law. The bill, which would prevent the federal government from taxing Social Security benefits, has been introduced in Congress multiple times but has not advanced far enough to reach a vote in both chambers or receive presidential approval.

The most recent version was introduced in 2023, but like earlier versions, it stalled in committee. Bills that do not pass in one Congress expire and must be reintroduced in the next one if supporters want to pursue them again. As of now, no version of this bill has made it through both the House and Senate.

Key Takeaways

  • The No Tax on Social Security Act has been introduced several times but has never passed both chambers of Congress.
  • Social Security benefits are currently taxable income for some recipients, depending on their total income and filing status.
  • The taxation of Social Security is determined by federal law, not by state law, so a federal bill would be required to change it.
  • Even if the bill had passed, it would only affect future taxation and would not refund taxes already paid on benefits.

How Social Security is taxed right now

Under current federal law, part or all of your Social Security benefits may be taxable depending on your combined income. Combined income means your adjusted gross income plus nontaxable interest plus half of your Social Security benefits.

If you file as single and your combined income is between $25,000 and $34,000, up to 50 percent of your benefits are taxable. If it exceeds $34,000, up to 85 percent may be taxable. For married couples filing jointly, the thresholds are $32,000 and $44,000. If your combined income is below these thresholds, your benefits are not taxed at all.

The IRS sends Form SSA-1099 each January showing how much you received in benefits. You report this on your federal tax return using Form 1040. Many people use tax software or a tax preparer to calculate whether any portion is taxable.

Why the bill has not advanced

The No Tax on Social Security Act faces opposition from lawmakers concerned about federal revenue. Eliminating taxation on Social Security would reduce income to the federal government, and Congress would need to either cut spending elsewhere or increase other taxes to offset the loss.

The bill also faces questions about fairness. Some argue that taxing benefits for higher-income retirees is reasonable because they have other income sources, while lower-income retirees often pay no tax on their benefits already. Others counter that people paid into Social Security through payroll taxes during their working years and should not be taxed again on the same money.

These disagreements have kept the bill from gaining enough support to move out of committee in either chamber. Committee votes determine which bills advance to the full House or Senate floor, and without that support, a bill cannot reach a final vote.

What would change if the bill passed

If the No Tax on Social Security Act became law, it would prevent the federal government from taxing any portion of Social Security benefits going forward. Retirees would no longer report Social Security income on their federal tax returns, and the taxation rules based on combined income would no longer explore.

The change would explore only to benefits received after the law took effect. It would not refund taxes that people already paid on Social Security benefits in prior years. Anyone who had already filed tax returns reporting taxable Social Security income would not receive a refund based on a new law.

State taxes on Social Security

Thirteen states tax Social Security benefits to some degree: 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, others only for higher-income retirees, and some offer partial exemptions.

A federal law eliminating federal taxation would not automatically change state taxes. Each state would need to pass its own legislation to stop taxing Social Security. Some states have already chosen not to tax benefits even though federal law allows it, while others have chosen to tax them.

What you can do about Social Security taxes now

If you receive Social Security and want to reduce the amount that is taxable, you can manage your combined income. This might mean delaying other income, withdrawing from tax-deferred retirement accounts strategically, or timing the sale of investments. A tax professional can review your specific situation and suggest approaches that fit your circumstances.

You can also request that the Social Security Administration withhold federal income tax from your monthly benefit payment. This is done using Form W-4V, which you submit to your local Social Security office. Withholding does not reduce the amount of your benefit — it straightforward sets aside part of each payment for taxes, similar to how withholding works on a paycheck.

Frequently Asked Questions

Can I get a refund for taxes I already paid on Social Security?

No, not based on a future law change. If you paid taxes on Social Security benefits in past years, those taxes were owed under the law at that time. A new law would only affect future benefits. You could consult a tax professional about whether you may have overpaid in a specific year, but that would be a separate matter from a new law.

If the bill passes, when would it take effect?

The bill itself does not specify an effective date. If it passed, Congress would decide whether it applies when ready, at the start of the next tax year, or at some other point. The language of the final bill would determine when the change takes effect.

Would a state law change if the federal law changed?

No. States that currently tax Social Security would continue to do so unless they pass their own separate legislation. A federal change does not automatically override state tax law. Each state would need to act independently if it wanted to stop taxing benefits.

Why do some states not tax Social Security if federal law allows it?

States have the power to tax Social Security but are not required to. Some states have chosen not to as a policy decision, often to benefit retirees or to keep tax codes simpler. The decision is made by each state's legislature.