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 2019 Trustees Report.
Choose the type of estimates (summary or detailed) from the list of provisions.
| Number | Table and graph selection |
|---|---|
| H2 |
Starting in 2020, tax Social Security benefits in a manner similar
to private pension income. Phase out the lower-income thresholds
during 2020-2039.
Summary measures and graphs
(PDF version)
Detailed single year tables (PDF version) Memorandum containing this or a similar provision: |
| H3 |
Starting in 2021, 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 2021. 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 2026, 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 2021. 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: |