Tax on Social Security: What is the ‘You earned it, you keep it’ Act?

A new proposal is circulating on Capitol Hill in Washington DC from Minnesota Congresswomen Angie Craig, who is looking to reduce taxes for those on social security. By reducing the federal taxes on the benefits, seniors could keep a little more of their income each month, growing their total check.

In defending her new legislation, dubbed the “You earned it, you keep it’ Act,” she said, “Social Security is a promise we have made to the American people – if you work hard and play by the rules, the dignity of a secure retirement will be within your reach,” Craig said.

The bill makes good on this promise by reducing these taxes, which “threatens to undermine the financial security of retirees already struggling with rising prices.”

So far, the legislation does not seem to be gaining the attention of other lawmakers.

When will the 2023 COLA be announced?

Next month the Social Security Administration will release the 2023 Cost-of-living adjustment (COLA), which, based on the high levels of inflation, could be as high as seven or eight percent. This comes after a historic 5.9 percent increase was applied to benefits in 2022.

The COLA is typically announced in mid-October between the 13th to 15th.

With the Consumer Price Index holding steady in July, many are looking to next week’s BLS release to see how the COLA will be impacted by August price information. The July, August, and September price data determine the COLA each year.

Who is required to pay taxes on social security benefits?

If one’s combined income is under $25,000 ($32,000 for married couples), one will not be required to pay taxes on their benefits. As incomes increase, so do the taxes benefits will be subject to: