You Earned It, You Keep It Act

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.
• 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.
• 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.
• 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.
• 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.
• These changes would take effect for income earned in calendar years after 2025, meaning the first tax year impacted would be 2026.