Provisions Affecting Taxation of Benefits
These provisions revise the current rules for subjecting Social Security benefits to personal income tax. We provide a summary list of all options (printer-friendly PDF version) in this category. For each provision listed below, we provide an estimate of the financial effect on the OASDI program over the long-range period (the next 75 years) and for the 75th year. In addition, we provide graphs and detailed single year tables. We base all estimates on the intermediate assumptions described in the 2021 Trustees Report.
Choose the type of estimates (summary or detailed) from the list of provisions.
| Number | Table and graph selection |
|---|---|
| H2 |
Starting in 2022, tax Social Security benefits in a manner similar to private
pension income. Phase out the lower-income thresholds during 2022-2041.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| H3 |
Starting in 2023, modify personal income tax by: (a) establishing two-brackets
with marginal rates of 15 and 27 percent separated at $51,000 (CPI indexed); (b)
creating a non-refundable credit for low-income tax filers age 65 and older; and
(c) treating capital gains as regular income. Tax all Social Security benefits
at the applicable marginal rate (15 or 27 percent) less 7.5 percent, with 60
percent of this revenue going to OASDI and 40 percent going to HI.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| H4 |
Increase the threshold for taxation of OASDI benefits to $50,000 for single filers
and $100,000 for joint filers starting in 2023. Taxation of benefits revenues transferred
to the Hospital Insurance (HI) Trust Fund would be the same as if the current-law
computation applied.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| H5 |
Beginning in 2028, for single/head-of-household/married-filing-separate taxpayers with
MAGI of $250,000 or more and joint filers with MAGI of $500,000 or more, include up to
the remaining 15 percent of Social Security benefits in taxable income (increased from
up to 85 percent of benefits taxable under current law). In subsequent years, update these
thresholds for growth in wages (AWI). Revenue from this provision would be credited to
the Social Security trust funds. Current law taxation of up to 85 percent of Social Security
benefits would remain unchanged.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |
| H6 |
Eliminate federal income taxation of OASDI benefits that is credited to the OASI
and DI Trust Funds for 2054 and later. Phase out OASDI taxation of benefits by increasing
relevant "income" thresholds from 2045 through 2053 as follows, for single/joint
tax filers: (a) 2045 = $32,500/$65,000; (b) 2046 = $40,000/$80,000; (c) 2047 =
$47,500/$95,000; (d) 2048 = $55,000/$110,000; (e) 2049 = $62,500/$125,000; (f) 2050 =
$70,000/$140,000; (g) 2051 = $77,500/$155,000; (h) 2052 = $85,000/$170,000; and
(i) 2053 = $92,500/$185,000. Taxation of benefits revenues for the Hospital Insurance
(HI) Trust Fund would be maintained at the same level as if the current-law computation
applied.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| H7 |
Replace the current-law thresholds for federal income taxation of OASDI benefits
with a single set of thresholds at $50,000 for single filers and $100,000 for joint
filers for taxation of up to 85 percent of OASDI benefits, effective for tax year
2023. These thresholds would be fixed and not indexed to price inflation or average
wage increase. Reallocate a portion of revenue from taxation of OASDI benefits to
the HI Trust Fund such that the HI Trust Fund would be in the same position as if
the current-law computation (in the absence of this provision) applied. The net
amount of revenue from taxing OASDI benefits, after the allocation to HI, would
be allocated to the combined Social Security Trust Fund.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memoranda containing this or a similar provision: |