Social Security remains a lifeline for nearly 74 million Americans, and for many retirees, it’s more than a monthly benefit—it’s the foundation of their financial security. According to the Pew Research Center, almost two-thirds of recipients (63 percent) rely on their checks for at least half of their personal income. Even more striking: more than a quarter (27 percent) say Social Security is their only source of income.
Yet since 1984, retirees with income above certain thresholds have been required to pay federal taxes on their Social Security benefits. For seniors living on fixed incomes, those taxes can feel like an unfair hit.
Recent legislation introduces a new $6,000 bonus senior deduction, which will significantly reduce the number of retirees who owe federal tax on their benefits, at least through 2028. For many older Americans, this deduction could offer meaningful relief.
Meanwhile, several lawmakers want to go even further. The latest effort, the You Earned It, You Keep It Act, reintroduced by Rep. Angie Craig in April 2025, aims to eliminate federal taxes on Social Security altogether. To offset lost revenue, the proposal would raise the cap on the Social Security payroll tax.
If Congress passes the measure, federal taxation of Social Security benefits would end, beginning with 2026 tax returns, filed in 2027, marking one of the most significant changes to retiree taxation in decades.
For seniors who depend heavily on their benefits, these proposals could shape a more secure and predictable financial future.
While not taxing Social Security income could certainly help matters, the central issue is the low amount these benefits offer. American retirees need an increase to compete with the growing cost of living. That’s why we support a bill we call the Elder Relief Act. This legislation could give seniors the change they really need. Learn more here.