A bill to amend the Internal Revenue Code of 1986 to apply inflation adjustments to the base amount and adjusted base amount for purposes of determining taxable social security benefits.

Key Points

• The bill would change Section 86 of the tax code so the income thresholds that decide how much of a person's Social Security benefit is taxed go up automatically with inflation, instead of staying frozen indefinitely.
• The adjustment would kick in for tax years starting after 2026, meaning it would first affect returns filed for the 2027 tax year.
• The inflation adjustment would be based on the same cost-of-living formula used elsewhere in the tax code, but recalculated using 2025 as the new base year instead of 2016.
• Any adjusted threshold amount that isn't a round number would be rounded up to the nearest $100, keeping the math simple for taxpayers and the IRS.
• The bill was introduced by Senator Kennedy and referred to the Senate Finance Committee, meaning it is at an early stage with no guarantee of moving forward.