new bill introduced in the House of Representatives aims to eliminate federal taxes on Social Security benefits for seniors beginning in 2025 , which the bill ’ s sponsors say would be paid for by raising the cap on the Social Security payroll tax . That would mean , starting in 2025 , Americans earning $ 250,000 or more would pay a Social Security tax on all of their earnings . The tax is currently capped at $ 168,800 of earnings for 2024 .

The bill would repeal the taxation of Social Security benefits and would let the Old-Age , Survivors and Disability Insurance program continue making all payments through 2054 , some 20 years longer than the current projection of 2034 , when benefits are due to be reduced by 20 %, according to an analysis from Social Security ’ s chief actuary , Stephen Goss .

The legislation would also reduce the federal debt by $ 8.9 trillion over 75 years , Goss said .

The bill , called the “ You Earned It , You Keep It Act ,” has been introduced two years in a row by Democrat Angie Craig of Minnesota .

“ This bill is a win-win ,” said Craig in a statement . “ It ’ s a tax cut for seniors and a way to ensure more Americans can depend on the Social Security benefits they ’ ve earned . And on top of that , it ’ s fiscally responsible .

“ I ’ m leading the charge on this issue in Congress ,” Craig continued , “ because we need to get money back in the pockets of middle-class Americans . The ‘ You Earned It , You Keep It Act ’ will help us get it done .”

According to Goss , if Congress doesn ’ t act , only 80 % of scheduled benefits could be payable on a timely basis in 2034 after the combined trust fund reserves are depleted . The percentage of payable benefits then declines to 74 % by 2097 .

The current $ 168,800 limit at which annual earnings are subject to Social Security taxes reflects an increase of $ 8,400 from last year .

The Peter G . Peterson Foundation , a nonpartisan think tank , analyzed the arguments for and against raising or eliminating the cap on Social Security taxes .

Those who are for raising the cap say it would make the Social Security tax less regressive , shore up the Social Security trust funds and fight income inequality .

But opponents say that those paying more are getting less of a stake in their benefits because the link between benefits and taxes is weaker if benefits aren ’ t increased as well , the foundation says . Critics of the idea also cite the fact that “ high-income beneficiaries may also be subject to income taxes on the Social Security benefits they receive ,” the foundation said .

Those who are for raising the cap say it would make the Social Security tax less regressive , shore up the Social Security trust funds and fight income inequality .

The original co-sponsors of the “ You Earned It , You Keep It Act ” include Democrats Ro Khanna of California , Yadira Caraveo of Colorado , Don Davis of North Carolina , Mary Peltola of Alaska , Andrea Salinas of Oregon and Hillary Scholten of Michigan .

— Tracey Longo

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