Summary of Provisions That Would Change the Social Security Program
Description of Proposed Provisions:
Provisions Affecting Taxation of Benefits
Estimates based on the intermediate assumptions of
the 2023 Trustees Report
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|
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 3.61 percent of payroll and in annual balance for the 75th year is 4.35 percent of payroll. | ||||||
| H2 |
Starting in 2024, tax Social Security benefits in a manner similar to
private pension income. Phase out the lower-income thresholds during 2024-2043.
graph | table | pdf-graph | pdf-table | memo (Warshawsky 2008) |
0.20 | 0.16 | 5% | 4% | |
| H4 |
Increase the threshold for taxation of OASDI benefits to $50,000 for single
filers and $100,000 for joint filers starting in 2025. 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) |
-0.09 | -0.01 | -3% | -0% | |
| H5 |
Beginning in 2030, 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) |
-0.58 | -1.04 | -16% | -24% | |
| 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 2025. 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, Blumenthal, Van Hollen September 2019) | memo (Larson, Blumenthal, Van Hollen January 2019) | memo (Larson 2017) |
-0.15 | -0.01 | -4% | -0% | |