No Tax on Social Security Bill: What You Need to Know in 2025

There is growing momentum behind a no tax on Social Security bill in Congress and in public discussion. 

Under current law, many retirees already pay income taxes on their Social Security benefits, depending on their income. 

The proposed bills and recent tax legislation aim to exempt those benefits for most seniors.

Understanding the no tax on Social Security bill proposals, their mechanics, and where they stand is crucial. 

What does a “no tax on Social Security bill” propose?

A no tax on Social Security bill would exclude Social Security benefits (and Tier I railroad retirement benefits) from being counted as taxable income for federal income tax. 

One such bill is H.R. 904 — No Tax on Social Security. 

That bill seeks to remove Social Security benefits from gross income rules for tax purposes.

Another bill under discussion is the “You Earned It, You Keep It Act”, which proposes to eliminate federal taxes on Social Security starting in 2026, while offsetting revenue by adjusting the payroll tax cap so higher earners pay more.

What recent legislation already changes taxation of Social Security?

As of mid-2025, a sweeping tax and spending law known as the One Big, Beautiful Bill was signed into law. 

That law offers historic tax relief for seniors by including provisions aimed at reducing the taxation of Social Security benefits.

Under that law, nearly 90 percent of Social Security beneficiaries will no longer owe federal income taxes on their benefits, according to the SSA.

However, rather than fully exempting Social Security from taxes, the law provides a $6,000 deduction for people age 65 and older, subject to income limits. That deduction may reduce or eliminate tax liability for many seniors, but benefits remain taxable for those with higher incomes.

In short, the new law moves toward a form of “no tax on Social Security” for many beneficiaries, but it does not fully abolish the tax for all.

Who would benefit under a no tax on Social Security bill?

Under the existing and proposed laws:

1. Most lower- and middle-income retirees would see full or near-full exemption of their Social Security benefits from federal income tax. The deduction in the new law aims to cover benefits for many in that income bracket.
2. Those with higher incomes would still face taxation under many proposals. The deduction phases out above certain thresholds.
3. Because revenue from taxing Social Security currently supports trust funds, fully exempting all benefits could strain the Social Security system’s finances unless offset by new revenue or cuts elsewhere.

What are the trade-offs and challenges of no tax on Social Security?

There are several trade-offs and obstacles:

1. Revenue loss: Removing all taxation on benefits would reduce income for the federal government and for trust funds that rely in part on those taxes. Proposals often require offsets, like raising taxes elsewhere or adjusting benefit formulas.
2. Complexity and fairness: Deciding who qualifies for full exemption and who doesn’t (based on income) complicates the system.
3. Impact on trust fund solvency: Because taxes on Social Security benefits are often earmarked back into Social Security or related funds, exempting them would reduce that revenue stream unless replaced.
4. Political constraints: Under reconciliation rules in Congress, altering trust fund revenues or mandatory spending (like Social Security) is restricted, limiting how far a “no tax” bill can go. That’s why legislation often settles for deductions instead of full exemption.

How does the current tax treatment of Social Security work?

Under current law:

1. Some portion of Social Security benefits is taxed depending on provisional income, which includes adjusted gross income, tax-exempt interest, and half of Social Security benefits.
2. For single filers, once provisional income exceeds $25,000, up to 50 percent of benefits may be taxed; above $34,000, up to 85 percent may be taxed.
3. For married couples filing jointly, the thresholds are $32,000 (for 50 percent tax) and $44,000 (for 85 percent tax).
4. The new legislation adds deductions that may offset or eliminate the taxable portion for many seniors.

What is the status of the no tax on Social Security bills?

1. H.R. 904 (“No Tax on Social Security”) was introduced in January 2025 and referred to the House Ways and Means Committee. It aims to exclude Social Security and Tier I railroad retirement benefits from taxable income.
2. The You Earned It, You Keep It Act is co-sponsored by lawmakers seeking to eliminate federal taxes on benefits starting 2026.
3. The One Big, Beautiful Bill has passed, offering deductions that effectively exempt most beneficiaries, but it does not fully eliminate taxation of Social Security benefits.
4. Many public statements and media claims say “no tax on Social Security,” but analysts note that the law’s deduction is different from full exemption.

What should you watch next?

To follow changes in the no tax on Social Security bill movement:

• Monitor whether H.R. 904 advances out of committee and receives floor votes.
• Track how the You Earned It, You Keep It Act fares in Congress.
• Watch IRS and Treasury rulemaking to clarify how the new deductions apply, phase-outs, and interactions with existing tax rules.
• Observe any proposals to fully eliminate benefit taxation, especially during debt ceiling or reconciliation debates.
• See how changes impact Social Security trust fund projections, since tax exemptions reduce revenue support.
• Keep alert for tax season announcements—how the new deduction will be implemented for 2025 returns and beyond.