Senator Ruben Gallego (D-AZ) has introduced legislation ensuring that no income taxes will be paid or taken out of Social Security income.
Part of how Sen. Gallego's You Earn It, You Keep It Act works is that it expands the Social Security payroll tax to covered earnings of $250,000 a year or more.
Under current law, Social Security is funded through a payroll tax, which is levied at a rate of 6.2% on employer and employee wages, while the self-employed pay double (12.4%).
Thus, Sen. Gallego's bill raises the payroll tax on those making more than $250,000 per year, claiming they pay very little.
"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," the Arizona Senator said in his press release, further claiming that "Trump claimed he ended taxes on Social Security. My bill actually does it. Permanently."
In July, the claim that Social Security is tax-free under the One Big Beautiful Bill was given nuance: rather than literally eliminating federal income taxes on Social Security altogether, the OBBB provides a new enhanced deduction for taxpayers aged 65 and older.
As a result, "The new law includes a provision that eliminates federal income taxes on Social Security benefits for most beneficiaries, providing relief to individuals and couples."
The You Earn It, You Keep It Act is Gallego's latest piece of tax-related legislation in recent days, cosponsoring the Lowering Electric Bills Act, which restores clean energy tax credits found in the Inflation Reduction Act (IRA) that were eliminated in the OBBB.
The IRA offered tax credits for wind and solar energy. Without these credits, he claims, energy bills will increase, and nearly 1 million jobs will be lost by 2030 due to 300 factories going unconstructed or never opening.
