Social Security Tax Could End in 2026: New Bill Aims to Let Retirees Keep All Benefits

Social Security Tax: When Americans retire, they often find out that the government can tax up to 85% of the money they worked for. This has frustrated a lot of seniors. People hoped that 2025 might finally bring a change, especially after President Donald Trump said during his campaign that he would end Social Security taxes in his second term. But the truth is, the big GOP tax bill signed by Trump on July 4, 2025, does not actually change anything about Social Security taxes.

There is a new plan trying to fix this called the ‘You Earned It, You Keep It’ Act. This bill could change the rules and might make a big difference for retirees.

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What the ‘You Earned It, You Keep It’ Act Says

On September 4, Senator Ruben Gallego from Arizona introduced the bill in the Senate. A similar version was introduced in the House by Representative Angie Craig of Minnesota in April. The bill would end federal taxes on Social Security benefits forever.

• It permanently stops federal taxes on Social Security benefits, rather than partially reducing them or raising income thresholds.
• If passed this year, retirees could stop paying Social Security taxes starting in 2026, affecting tax returns filed in 2027.

Senator Gallego said, “Like a lot of Americans, I’ve been paying into Social Security since my first job at fourteen. But despite decades of paying into the system, seniors are still forced to pay taxes on their hard-earned benefits – all while the ultra-wealthy barely pay into the system at all.” He also said, “Trump claimed he ended taxes on Social Security. My bill actually does it. Permanently” reported Keplinger.

To make sure the Social Security system still has enough money, the bill suggests raising the payroll tax limit. Right now, only wages up to $176,100 are taxed for Social Security. If this bill passes, starting in 2026, wages above $250,000 would be taxed at 6.2%. This way, higher earners continue to pay, which helps keep the Social Security fund strong. Experts think this could keep Social Security payments going until at least 2058, which is much longer than the current estimate of 2034.

Why Social Security is Taxed?

Social Security benefits can be taxed if your income is above a certain limit.

• For singles, that’s $25,000
• For couples, it’s $32,000

If you go over that, up to 85% of your benefits can be taxed. These limits have not changed since 1984. Back then, less than 10% of seniors paid any tax on Social Security. Today, almost 56% of retirees pay some tax.

Social Security Tax: Why People Want Change?

Many lawmakers from both parties say this is unfair because seniors already paid into the system for decades. With inflation making life more expensive, more politicians want to make Social Security fairer. Some people worry about losing government money if taxes go away completely.

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That’s why some bills, like the RETIREES FIRST Act, want to raise the income limits instead of ending taxes completely. This law would raise the limits to $34,000 for individuals and $68,000 for couples filing together. Senator Marsha Blackburn said, “Retirees across the country depend on Social Security, especially after enduring the record-high inflation of the last four years. This bill would cut taxes on seniors’ benefits, helping them keep more of their hard-earned money.”

Supporters of a full repeal also suggest adjusting the limits every year for inflation. This would prevent more and more seniors from paying taxes just because costs go up slowly over time.

What will Happen Next?

If the ‘You Earned It, You Keep It’ Act becomes law this year, seniors could stop paying taxes on Social Security in 2026. But there is no guarantee yet. The new GOP tax bill does offer one small benefit. It gives older adults a temporary $6,000 tax break, which is some help, but it does not end Social Security taxes.