The bill did not pass Congress

The Social Security tax exemption bill — formally called the No Taxes on Social Security Act — has not become law. It was introduced in Congress but did not advance far enough to reach a vote in both chambers. As of now, Social Security benefits remain taxable income under federal law for people whose combined income exceeds certain thresholds.

The bill has been reintroduced in multiple sessions of Congress, most recently in 2023 and 2024, but each time it stalled in committee. This means the proposal never made it to a full floor vote in the House or Senate, so it never had a chance to become law.

Key Takeaways

  • The No Taxes on Social Security Act has not passed; it remains a proposal that has stalled in committee multiple times.
  • Currently, you may owe federal income tax on your Social Security benefits if your combined income exceeds $25,000 (single filers) or $32,000 (married filing jointly).
  • The bill would have exempted all Social Security benefits from federal taxation, but it has not advanced to a floor vote.
  • State taxes on Social Security vary — some states tax benefits, others do not, regardless of what happens at the federal level.

How Social Security is taxed right now

Under current federal law, up to 85 percent of your Social Security benefits can be counted as taxable income. The amount depends on your combined income, which includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits.

If you file as single and your combined income is between $25,000 and $34,000, you may owe tax on up to 50 percent of your benefits. If your combined income exceeds $34,000, you may owe tax on up to 85 percent. The thresholds are higher for married couples filing jointly — $32,000 to $44,000 for the 50 percent tier, and above $44,000 for the 85 percent tier.

These income thresholds have not changed since 1984, even though the cost of living has risen significantly. This means more retirees fall into the taxable range each year, even if their actual purchasing power has not increased.

What the No Taxes on Social Security Act would have done

The bill proposed to eliminate federal income tax on all Social Security benefits, regardless of how much other income a person receives. This would have meant that no portion of your benefits would count toward your taxable income for federal purposes.

The bill did not propose to change state taxes on Social Security. Some states already do not tax Social Security benefits at all, while others tax them the same way the federal government does. A federal exemption would not override state law.

The bill also did not propose to change how Medicare premiums are calculated. Your Social Security benefits affect your Medicare Part B and Part D premiums through a separate income-related adjustment mechanism, and that would have remained in place.

Why the bill has not advanced

The No Taxes on Social Security Act faces opposition from lawmakers concerned about federal revenue loss. The Congressional Budget Office and the Joint Committee on Taxation have not published formal cost estimates for the bill, but any exemption of Social Security from taxation would reduce federal income tax revenue.

The bill also competes with other Social Security proposals in Congress, including measures to adjust the income thresholds for taxation, to raise the payroll tax cap, or to change benefit formulas. Lawmakers disagree on which approach would best address Social Security's long-term funding challenges, and that disagreement has prevented any single proposal from gaining enough support to move forward.

Additionally, the bill has not received significant bipartisan sponsorship. Most versions have been introduced by members of one party, which typically limits a bill's chances of passing in a divided Congress.

State taxes on Social Security benefits

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 benefits the same way the federal government does, while others use different income thresholds or exemption amounts.

Five states — Colorado, Kansas, Missouri, and Nebraska — have passed laws to phase out their Social Security taxes over time, though the phase-out is not yet complete in all of them. If you live in one of these states, your state tax burden on benefits may decrease in the coming years even if federal law does not change.

If you live in a state that does not tax Social Security, a federal exemption would not change your state tax bill. If you live in a state that does tax benefits, a federal exemption would only affect your federal return, not your state return.

What you can do about Social Security taxation now

If you are receiving Social Security and owe federal income tax on your benefits, you can request that the Social Security Administration withhold taxes from your monthly payment. You do this by completing Form W-4V and submitting it to your local Social Security office or mailing it to the address on the form. Withholding does not reduce your tax bill — it just spreads the payment across the year instead of requiring a lump sum at tax time.

You can also work with a tax professional to explore whether your filing status, deductions, or income timing might reduce the amount of your benefits that are taxable. Some people can lower their combined income by timing when they take distributions from retirement accounts, by managing investment income, or by claiming deductions they may have overlooked.

If you have not yet started Social Security, delaying your claim increases your monthly benefit amount, which may or may not increase your tax burden depending on your other income sources. A financial advisor or tax professional can help you model different claiming ages against your expected income in retirement.

Frequently Asked Questions

Could the No Taxes on Social Security Act still pass in the future?

It is possible, but it would require either a change in Congress or a shift in how current lawmakers view the bill's cost. The bill has been reintroduced multiple times without advancing, which suggests it does not currently have enough support. Future versions might include provisions to offset the revenue loss, such as changes to other tax rules or spending cuts, which could change its prospects.

If the bill passes, would I get a refund for taxes I already paid on Social Security?

No. Tax law changes typically explore only to income earned or received after the law takes effect. You would not receive a refund for taxes paid in prior years, though you could potentially amend old returns if you believed you were taxed incorrectly under the rules that were in place at the time.

Does the bill address Medicare premiums tied to Social Security income?

No. The No Taxes on Social Security Act focuses only on federal income tax. Medicare Part B and Part D premiums are adjusted based on income-related thresholds that are separate from the income tax code, so a change to Social Security taxation would not automatically change how your premiums are calculated.

What is the difference between federal and state taxes on Social Security?

Federal tax is owed to the U.S. government and is based on federal income tax rules. State tax is owed to your state and is based on that state's tax code. Some states do not tax Social Security at all, while others use different thresholds or rates than the federal government. A change to federal law would not affect state taxes.