Ending Social Security Benefit Taxation and Raising Payroll Tax Cap.
This law eliminates federal income tax on all Social Security benefits, providing financial relief to retirees. To secure the program's funding, it applies the Social Security payroll tax on earnings above $250,000 annually, leaving earnings between the current cap and $250,000 untaxed. These newly taxed high earnings will also count toward calculating higher future retirement benefits.
Key points
Social Security benefits will no longer be included in gross income subject to federal income tax.
Application of Social Security payroll tax (OASDI) on wages and self-employment income exceeding $250,000 per year (starting after 2024).
Earnings above $250,000 that are now taxed will be included in the formula used to calculate future Social Security benefits.
Protections are included to ensure that increased Social Security benefits do not negatively affect eligibility for SSI, Medicaid, or CHIP.
Expired
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