Bill Proposed to Untax Social Security Benefits starting in 2025

[Uncle Sam]

https://www.narfe.org/blog/2024/02/18/the-you-earned-it-you-keep-it-act-aims-to-eliminate-taxes-on-social-security-benefits/

The plan is to increase the maximum FICA tax on earned income up to $ 250,000 starting in 2025. That will extend solvency in the Social Security fund for 20 years. Read the "Analysis" link at end of article

[Anarchrist]

If the 25K/32K social security thresholds were adjusted for inflation, they'd be $75,256 / $96,328.

[FEDUKE404]

If the 25K/32K social security thresholds were adjusted for inflation, they'd be $75,256 / $96,328.

Kinda makes you wonder what the $3k maximum allowable capital gain loss might be. . .

[EvenKeelTax]

Kinda makes you wonder what the $3k maximum allowable capital gain loss might be. . .

I've "only" been doing taxes for 13 years and it's never adjusted. How long has it been $3000?!

[Uncle Sam]

Since around 1986 - when the Tax Reform Act of 1986 was passed.

[Rapid Robert]

Now that the obligatory comments on inflation indexing have been made (and let's add to the list, the $400 floor on net profits for self-employment tax), it's not clear how the math of the proposal adds up. By reducing taxable SS benefits, the money going to pay for future benefits is reduced. (Although how the total amount of tax on SS benefits is calculated is a mystery, since every taxpayer has their own particular marginal and effective tax rate).

https://www.ssa.gov/oact/progdata/taxbenefits.html

While we're at it -- sure, every SS beneficiary is probably aware of how taxability of benefits affects them -- but how many on Medicare realize that every month, they are receiving an additional tax-free health insurance subsidy of over $500/month (Part A benefit)?

EDIT: oh, it's not really a tax cut, it just moves the income tax from SS beneficiaries to all taxpayers

"This provision would repeal taxation of Social Security benefits, but would provide for transfers from the General Fund of the Treasury to the OASI, DI, and HI Trust Funds of amounts equivalent to the projected amounts of revenue that would have been realized from taxation of benefits in the absence of this provision"

[Anarchrist]

On another board, someone mentioned the $3000 dependent care limit and asked about other tax items that have not been adjusted for inflation. The first three below were already mentioned when I saw the thread. The last six were items I could remember off the top of my head.

• $3000 dependent care credit initiated 1976. Adjusted for inflation, $16,551
• $3000 capital loss limit initiated 1978. Adjusted for inflation, $14,723
• 25K/32K social security thresholds initiated 1984. Adjusted for inflation, $75,256 / $96,328

• $25 Gift limit initiated 1962. Adjusted for inflation, $255
• $25K passive loss limit initiated 1987. Adjusted for inflation, $68,962
• $150K passive income threshold initiated 1987. Adjusted for inflation, $413,776
• $10K SALT deduction limit initiated 2018. Adjusted for inflation, $12,375
• $10K FBAR threshold initiated 1970. Adjusted for inflation, $82,096
• $200k/$250K additional medicare tax threshold initiated 2013. Adjusted for inflation, $266K/$333K

I don't know when the $400 threshold for SE tax was implemented, but it was around in 1987. So that's at least $1100.

The adjusted dollar amounts really show how criminal congress is.

[Lion]

Educator expense deducted above the line, up from $250 to $300. Don't remember when initiated.

[Rapid Robert]

"The adjusted dollar amounts really show how criminal congress is."

They temporarily increased the dependent care credit to over $10K.

Failing to index tax limits to inflation for wealthy taxpayers is one of the least criminal things Congress has done.

[dtlee]

The adjusted dollar amounts really show how criminal congress is.

Interesting comment.

I referred a few years ago to that same group as the "morons" and one of the people in this thread asked that I be banned for taking a political stance (as if there is a moron party). I await his demand that you be removed. He did successfully get my post deleted.

[Anarchrist]

$300 educator expense deduction initiated 2002 at $250. $250 adjusted for inflation, $433
$400 SE Tax threshold initiated 1951. Adjusted for inflation, $4,831