Provisions Affecting Taxation of Benefits

Present law taxation of Social Security benefits

These provisions revise the current rules for subjecting Social Security benefits to personal income tax. We provide a summary list of all options 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.

All estimates are based on the intermediate assumptions described in the 2010 Trustees Report. Choose the type of estimates (summary or detailed) from the list of provisions.

Number	Table and graph selection
H1	Tax Social Security benefits in a manner similar to private pension income beginning in 2011. Phase out the lower-income thresholds during 2011-2020. Summary measures and graphs (PDF version) Detailed single year tables (PDF version) Memorandum containing the provision (effective dates may be different)
H2	Tax Social Security benefits in a manner similar to private pension income beginning in 2011. Phase out the lower-income thresholds during 2011-2030. Summary measures and graphs (PDF version) Detailed single year tables (PDF version) Memorandum containing the provision (effective dates may be different)
H3	Tax Reform for Individuals: For personal income tax, establish in 2012 a 2-bracket approach with marginal rates of 15 and 27 percent separated at $51,000 (CPI indexed) for 2012 and later, with a non-refundable credit for low-income tax filers age 65 and older. Capital gains would be treated as regular income. All Social Security benefits would be taxed starting 2012 at the applicable marginal rate (15 or 27) less a non-refundable credit of 7.5 percent. Revenue to OASDHI would be based on the net marginal rates of 7.5 and 19.5 percent, with 40 percent of revenue dedicated to HI. Summary measures and graphs (PDF version) Detailed single year tables (PDF version) Memorandum containing the provision (effective dates may be different)
	Above provisions Summary measures


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