H.R.904 - No Tax on Social Security (119th Congress)
Summary
H.R.904, the "No Tax on Social Security Act," aims to amend the Internal Revenue Code of 1986 by repealing the inclusion of Social Security benefits in gross income. The bill was introduced in the House of Representatives on January 31, 2025, and referred to the Committee on Ways and Means. It also includes a provision to ensure Social Security Trust Funds are held harmless by appropriating funds to offset any reduction in transfers due to the repeal.
Expected Effects
If enacted, this bill would eliminate federal income taxes on Social Security benefits for recipients. The government would need to find alternative funding sources to compensate for the lost tax revenue. This would directly impact the federal budget and potentially influence other government programs.
Potential Benefits
- Increased disposable income for Social Security recipients: Beneficiaries would retain a larger portion of their Social Security payments.
- Simplified tax filing: Eliminating the need to calculate taxable Social Security benefits reduces complexity.
- Potential economic stimulus: Increased disposable income could lead to higher consumer spending.
- Reduced burden on low-income seniors: Those with limited income would benefit most from tax elimination.
- Fairness: Some may view taxing Social Security benefits as unfair, this bill would address that.
Most Benefited Areas:
Potential Disadvantages
- Reduced federal revenue: Eliminating the tax on Social Security benefits would decrease government income.
- Potential strain on the federal budget: The government would need to find alternative funding or cut spending elsewhere.
- Impact on Social Security Trust Funds: While the bill aims to hold the funds harmless, economic fluctuations could still pose risks.
- Possible increase in the national debt: If alternative funding is not secured, the national debt could increase.
- Disproportionate benefit to higher-income beneficiaries: Those with higher Social Security benefits would receive a larger tax break.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's constitutional alignment primarily concerns Article I, Section 8, which grants Congress the power to lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the common defense and general welfare of the United States. While the bill repeals a specific tax, it also includes provisions to appropriate funds to maintain the Social Security Trust Funds, which aligns with the general welfare clause. The appropriations clause is also relevant, as it dictates how money is drawn from the Treasury.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).