Overview
Title
To amend the Internal Revenue Code of 1986 to repeal the inclusion in gross income of Social Security benefits.
ELI5 AI
The bill wants to stop making people pay taxes on their Social Security money, which is like a monthly allowance given to people when they get old or can't work. It will also make sure that the money needed for these allowances doesn't run out, even if the government gets less money from taxes.
Summary AI
H.R. 904 proposes to change the Internal Revenue Code of 1986 by stopping the requirement to include Social Security benefits as part of a person's gross income for tax purposes. This means that individuals receiving Social Security would no longer have to pay federal income tax on those benefits. The bill also ensures that the Social Security Trust Funds are not financially affected by these changes, as it provides for appropriations to cover any funding shortfalls caused by this repeal.
Published
Keywords AI
Sources
Bill Statistics
Size
Language
Complexity
AnalysisAI
The proposed legislation titled "No Tax on Social Security" seeks to modify the Internal Revenue Code of 1986 by halting the practice of including Social Security benefits in taxable income. Put forth by the 119th Congress, the bill introduces a significant amendment that would alter how Social Security benefits are treated for tax purposes. Specifically, it proposes terminating the inclusion of Social Security benefits in gross income and aims to ensure that the Social Security and Railroad Retirement trust funds remain financially unaffected by these changes through compensatory appropriations from the U.S. Treasury.
General Summary
The primary purpose of this bill is to amend the section of the Internal Revenue Code that dictates how Social Security benefits are taxed. As it stands, some Social Security benefits are included in a recipient's gross income, which can result in tax obligations on those benefits for certain income brackets. This bill proposes to eliminate this taxation by stopping the inclusion of Social Security benefits in gross income starting the year this bill is enacted. Furthermore, the bill stipulates that funds from the U.S. Treasury will be used to make up for any shortfall in the Social Security and Railroad Retirement trust funds resulting from this tax change.
Significant Issues
Removing the taxation of Social Security benefits means potentially substantial revenue losses for the federal government, although the exact financial impact is unspecified. This could raise concerns about how to offset the decreased revenue. Additionally, the bill includes a provision to substitute this lost revenue by appropriating funds from the U.S. Treasury. This language is vague, creating potential uncertainty about government financial allocations.
The absence of clarity on the financial implications for both taxpayers and the broader economy may lead to confusion and could pose challenges in terms of fiscal policy adjustments.
Impact on the Public and Stakeholders
Public Impact: For the average taxpayer, especially retirees and those primarily reliant on Social Security benefits, this bill could mean fewer tax obligations and potentially increased disposable income. However, the overall effect could depend on how the government addresses the revenue shortfall. For the Treasury, funding the shortfall might require adjustments in other areas of the federal budget, potentially impacting other public services or leading to increased borrowing.
Stakeholders: Older adults and retirees who rely mainly on Social Security benefits stand to benefit from the tax relief the bill proposes. Conversely, policymakers and government budget offices may face challenges ensuring the Social Security and Railroad Retirement trust funds remain solvent without adversely affecting other budgetary commitments. The impact on fiscal policy, budget allocations, and taxpayer obligations could present significant considerations for legislators evaluating the potential costs versus benefits of the proposed changes.
Ultimately, while this bill seeks to provide immediate tax relief to those who receive Social Security benefits, it may bring about broader questions regarding federal budget management and revenue collection strategies to maintain fiscal balance.
Issues
The amendment in Section 2 to repeal the inclusion of social security benefits in adjusted gross income may significantly impact federal revenue collection. This financial implication is crucial for understanding the overall economic effects but is not clearly addressed in the bill.
Section 2 includes a provision to appropriate funds 'out of any money in the Treasury not otherwise appropriated' to cover the reduction in transfers to Social Security funds caused by the repeal. This vague language may create uncertainty regarding government budgeting and which funds are being utilized.
The bill's termination of Section 86 as noted in Section 2, without clarification on its impact on taxpayers and the broader tax system, could lead to confusion among taxpayers who rely on understanding their tax obligations.
The provision in Section 2 requiring appropriated funds to cover losses in the Social Security and Railroad Retirement funds might lead to substantial costs to the U.S. Treasury, impacting fiscal policy and potentially taxpayer liabilities, yet the exact financial impact is left unspecified.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill provides its official title, allowing it to be referred to as the “No Tax on Social Security” Act.
2. Repeal of inclusion of social security benefits in adjusted gross income Read Opens in new tab
Summary AI
The bill proposes to stop including Social Security benefits in taxable income for future years. Additionally, it ensures that Social Security and related trust funds receive the same amount of money by covering any financial shortfall caused by this change with transfers from the U.S. Treasury.