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Congress·In Committee·H.R. 2909

Rep. Craig Introduces the You Earned It, You Keep It Act to End Taxes on Social Security

You Earned It, You Keep It Act

11 months ago·View on Congress.gov

Legislative Progress

House
Senate
President
Law

Key Points

  • The bill would end federal income taxes on Social Security benefits. Currently, retirees with income above certain thresholds must pay tax on up to 85% of their benefits. This change would let every retiree keep their full benefit check without any federal tax.

    From policy text

    “Section 86 of the Internal Revenue Code of 1986 (relating to social security benefits) is amended by adding at the end the following new subsection: ``(g) Termination.--This section shall not apply to any taxable year beginning after the date of the enactment of this subsection.''.”
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  • To pay for the lost tax revenue, the bill creates a new Social Security payroll tax on earnings above $250,000. Right now, workers stop paying the Social Security portion of payroll taxes once their income hits about $168,600. This bill would restart that tax on all income over $250,000, creating a "donut hole" where income between the current cap and $250,000 remains exempt.

    From policy text

    “the term `wages' does not include that part of the remuneration which, after remuneration equal to such contribution and benefit base with respect to employment has been paid to an individual by an employer during the calendar year”
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  • The bill protects the Social Security Trust Fund from losing money due to the tax change. The Treasury would automatically fill any shortfall so the fund stays whole, using general revenues.

    From policy text

    “There are hereby appropriated (out of any money in the Treasury not otherwise appropriated) for each fiscal year to each fund under the Social Security Act (including the Federal Hospital Insurance Trust Fund) or the Railroad Retirement Act of 1974 an amount equal to the reduction in the transfers to such fund”
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  • High earners who pay the new tax would get a small boost to their future Social Security benefits — 2% of their "excess average indexed monthly earnings" — to reflect their extra contributions to the system.

    From policy text

    “2 percent of the individual's excess average indexed monthly earnings (as defined in subsection (b)(5)(A)).”
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  • The bill includes a hold-harmless provision so that people receiving SSI, Medicaid, or CHIP won't lose eligibility because of any benefit increase. Their income for those programs would be calculated as if this law never passed.

    From policy text

    “the amount of any benefit to which the individual is entitled under title II of such Act shall be deemed not to exceed the amount of the benefit that would be determined for such individual under such title as in effect on the day before the date of the enactment of this Act.”
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  • These changes would take effect for income earned in calendar years after 2025, meaning the first tax year impacted would be 2026.

    From policy text

    “The amendments made by subsections (a) and (c) shall apply to remuneration paid in calendar years after 2025.”
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TaxesSocial SecurityEconomy Finance

Impact Analysis

Personal Impact

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions
Apr 14, 2025House

Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Apr 14, 2025

Introduced in House

What Happens Next

Projected impacts based on AI analysis

2026-01-01

New payroll taxes on income above $250,000 begin, and Social Security benefits are no longer included in taxable income

Starting in tax year 2026, retirees keep their full Social Security checks tax-free, and high earners see new Social Security taxes on income above $250,000

Early 2027

First tax filing season where Social Security benefits are fully exempt from federal income tax

Retirees filing 2026 taxes in early 2027 will see the benefit for the first time — they won't need to report Social Security benefits as income or pay tax on them

Related Bills

1 bill
S. 2716Identical bill

You Earned It, You Keep It Act

Sep 4 — Read twice and referred to the Committee on Finance.

Source Information

Document Type

Congressional Bill

Official Title

You Earned It, You Keep It Act

Bill NumberHR 2909
Congress119th Congress
ChamberHouse of Representatives
Latest ActionReferred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Sponsor

Cosponsors

(13)
D: 13

Analysis generated by AI. Always verify with official sources.