Description of Proposed Provisions:
Provisions Affecting Taxation of Benefits
Estimates based on the intermediate assumptions of
the 2017 Trustees Report
Printer-friendly Version (PDF)
|
Change from current law [percent of payroll] |
Shortfall eliminated | |||||
|---|---|---|---|---|---|---|
|
Long-range actuarial balance |
Annual balance in 75th year |
Long-range actuarial balance |
Annual balance in 75th year |
|||
| Current law shortfall in long-range actuarial balance is 2.83 percent of payroll and in annual balance for the 75th year is 4.48 percent of payroll. | ||||||
| H1 |
Starting in 2018, tax Social Security benefits in a manner similar to
private pension income. Phase out the lower-income thresholds during
2018-2027.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.20 | 0.15 | 7% | 3% | |
| H2 |
Starting in 2018, tax Social Security benefits in a manner similar to
private pension income. Phase out the lower-income thresholds during 2018-2037.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
0.19 | 0.15 | 7% | 3% | |
| H3 |
Starting in 2019, 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.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
-0.01 | -0.04 | -0% | -1% | |
| H4 |
Increase the threshold for taxation of OASDI benefits to $50,000 for single
filers and $100,000 for joint filers starting in 2019. Taxation of benefits
revenues transferred to the Hospital Insurance (HI) Trust Fund would be the
same as if the current-law computation applied.
graph | table | pdf-graph | pdf-table | memo (Larson 2015) | memo (Larson 2014) |
-0.11 | -0.01 | -4% | -0% | |
| H5 |
Beginning in 2024, 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.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.01 | 0.01 | 0% | 0% | |
| 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.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
-0.41 | -0.94 | -14% | -21% | |
| 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 2019. 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.
graph | table | pdf-graph | pdf-table | memo (Larson 2017) |
-0.18 | -0.01 | -6% | -0% | |