A new bill introduced by U.S. Senators Roger Marshall and Marsha Blackburn is drawing attention as it seeks to eliminate federal taxes on Social Security benefits, offering relief to millions of retirees. While the bill is intended to boost financial support for older Americans, critics warn that it could strain the Social Security trust fund and contribute to the national deficit.
Social Security’s Role in Retirement Income
Social Security benefits serve as a primary source of income for many retirees. According to the Social Security Administration (SSA), the average monthly benefit for January 2025 is estimated to be $1,976. However, millions of recipients currently face taxation on their benefits, which impacts their financial security—especially in today’s uncertain economic climate.
Key Provisions of the Bill
The bill proposes several major changes to the taxation of Social Security benefits:
- Raising the provisional income threshold to $34,000 for single filers and $68,000 for married filers to reduce the number of retirees subject to taxation.
- Indexing income thresholds to inflation to prevent retirees from being pushed into higher tax brackets over time.
- Simplifying tax rules by maintaining a single 85% inclusion rate for benefits exceeding the new income thresholds, making tax filing easier for seniors.
- Reallocating funds from non-defense, non-veterans, and non-homeland security discretionary spending to protect the Social Security and Medicare trust funds.
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Support and Criticism
Senator Roger Marshall emphasized that the tax burden on Social Security has been especially difficult for retirees after years of high inflation.
“By cutting taxes on Social Security, this bill will ensure America’s seniors keep more of their hard-earned money while addressing a major flaw in our tax system,” Marshall stated.
While supporters argue that reducing Social Security taxation will help millions of seniors, critics caution that funding adjustments may not be enough to offset the potential long-term financial impact on the Social Security trust fund.
The bill is now up for debate as lawmakers consider its potential economic consequences and benefits for retirees.
