Ryan Handson
United States Rep. Angie Craig (D-Minn.) is dreaming of a day when retired Americans won’t be forced to pay federal taxes on their hard-earned Social Security benefits. On Jan. 25, she reintroduced a bill that would turn that dream into a reality for millions of Americans across the US. If you rely on SS benefits, here’s what you need to know.
The Bill Is Dubbed The ‘You Earned It, You Keep It Act‘
The ‘You Earned It, You Keep It Act’ is nothing new to the House of Representatives. Craig first introduced the bill on Aug. 16, 2022, as a response to the rising cost of living. At the time, she said taxing Social Security benefits ‘diminishes our promise’ of a ‘secure retirement’ to those who have earned it ‘after decades on the job.’
Her solution? Eliminate federal taxes on Social Security benefits, and put money back into the pockets of retired Americans. If passed in 2022, the legislation would’ve been made effective in 2023 – meaning millions of Americans would already be seeing the impact. Unfortunately, the bill didn’t make its way through Congress.
Who Currently Pays Taxes On Social Security Benefits?
As of right now, anyone with a combined income above $25,000 (if filing single) or $32,000 (if filing jointly) is paying federal taxes on at least half of their Social Security benefits. This accounts for nearly 40% of all Americans currently receiving benefits – or more than 26 million people.
An individual’s, or couple’s, combined income (also known as provisional income) includes their adjusted gross income, nontaxable interest, and half of their social security benefits. Most people paying taxes on their benefits are those who have multiple incomes that carry them over that threshold of $25,000 or $32,000 (depending on filing status).
Craig Reintroduces The Bill To The House On Jan. 25
Craig, who has spent most of her term lowering costs for working families, wasn’t ready to give up on her bill. On Jan. 25, 2024, she reintroduced the ‘You Earned It, You Keep It Act’ to the House, and is now calling on Congress to do the right thing and pass it.
She carries a strong argument. Not only would the bill give all that hard-earned money back to those who need it most, but it would help ensure those Americans continue to see those benefits for decades to come – and would even reduce the federal debt by $8.9 trillion by 2100.
Where’s All This Money Coming From?
I know what a lot of you are thinking right now – how can the United States afford this plan? After all, the Social Security Old-Age and Survivors Insurance Trust Fund relies on those taxes as a major source of revenue. If we eliminate those taxes, how will the Social Security system survive?
Don’t worry. Craig has a solution for that, as well – by applying a Social Security tax to anyone making up to $250,000 per year. As of today, that cap is set at $168,600 – meaning anyone who makes under that has to pay the tax, while anyone making over that can avoid it.
What Happens If The Bill Isn’t Passed?
If the legislation doesn’t pass, millions of Americans could see their SS benefits suddenly drop in eight years. Current estimates suggest that the Trust Fund will run low by 2033. When this happens, retired Americans will lose about 25% of their benefits.
That’s a scary situation to think about, especially since many people are already struggling with 100% of the benefits. It’s only getting worse as the cost of living rises. We saw a 3.4% increase in the cost of goods this year – yet retired Americans only saw a 3.2% increase in SS payments.
‘You Earned It, You Keep It Act’ Would Extend Benefits For 20 Years
It’s not just about putting more money into Americans’ pockets now. The reintroduced bill also helps ensure retired Americans continue to receive the benefits they’ve worked so hard for. If passed, the bill would extend SS benefits for at least another 20 years – until 2054.
This would be a major win for millions of Americans who fear the day their benefits are reduced – or worse, eliminated. For a government that vows to do right by its people, not passing this bill would send the wrong message to a group of people who deserve a happy and rewarding retirement.
Congresswoman Angie Craig Calls It A ‘Win-Win’
The ‘You Earned It, You Keep It Act’ is being sponsored by representatives Ro Khanna (CA-17), Yadira Caraveo (CO-08), Don Davis (NC-01), Mary Peltola (AK-AL), Andrea Salinas (OR-06), and Hillary Scholten (MI-03). It’s also being endorsed by Social Security Works.
“This bill is a win-win – it’s a tax cut for seniors and a way to ensure more Americans can depend on the Social Security benefits they’ve earned. And on top of that, it’s fiscally responsible,” said Rep. Craig. “I’m leading the charge on this issue in Congress because we need to get money back in the pockets of middle-class Americans.”
Craig Receives Support, But Will It Be Enough?
In the two weeks since Craig reintroduced this bill to the House, several representatives have voiced their support in hopes of getting it passed. One of the bill’s sponsors, Rep. Yadira Caraveo (D-Col.), released a statement of her own four days after Craig’s release.
“Historic inflation is eroding seniors’ budgets, jeopardizing the financial security they’ve worked their whole lives to achieve,” said Rep. Caraveo. “The last thing they need is for the government to double tax their hard-earned Social Security benefits.”
How Many People Rely On Social Security Benefits?
According to the Social Security Administration, SS benefits are one of the primary sources of income for most people above the age of 65 – accounting for roughly a third of their income. More than 67 million Americans are currently receiving benefits, and more than $1.4 trillion in benefits are paid every year.
Most of that money goes towards rent, transportation, and food – as opposed to doing the things most people think of when they retire. In an interview with FOX 9 Minneapolis-St. Paul, a retired school teacher said she and her husband hope the new bill passes so they can finally do some traveling.
GIPHY App Key not set. Please check settings