Bill > SR122

Introduced Session

This resolution urges the President and Congress of the United States to enact legislation exempting payments of Social Security benefits from federal income tax. The Social Security Administration was established in 1935 to provide general welfare to the country's elderly population through a federal social insurance system. The payments, commonly referred to as Social Security benefits, were first paid out in 1937 to retired workers over the age of 65. Since then, the breadth of Social Security benefits has expanded to also provide for payments to early retirees, disability payments, survivors benefits, and payments to dependents of beneficiaries. The average monthly Social Security retirement benefit is about $1,900, which equals roughly $23,000 in annual gross income for a beneficiary. Almost 90 percent of individuals aged 65 or older in the United States receive some form of Social Security benefit, with these benefits representing approximately 30 percent of their total annual income. Additionally, over 20 percent of Social Security beneficiaries are not retirees but rather recipients of disability payments, survivor's benefits, or dependent's benefits. Prior to 1984, Social Security benefits were considered exempt from federal income taxes. Under current federal law, single filers who file a federal income tax return and have combined gross income greater than $25,000 are required to pay federal income tax on up to 50 percent of their Social Security benefit. Single filers with combined gross income greater than $34,000 are required to pay federal income tax on up to 85 percent of their benefit. These income thresholds have also not been adjusted to account for inflation occurring since the 1990s. While Social Security benefits have been treated as taxable income under the federal personal income tax since 1984, the New Jersey Constitution expressly prohibits levying a state personal income tax on Social Security benefits. In addition to New Jersey, 40 states and the District of Columbia do not levy a state personal income tax on Social Security payments. By placing an additional tax burden on Social Security recipients, the federal government fails to appreciate how essential every dollar of a Social Security payment is to many Americans. Legislation has been introduced in the House of Representatives of Congress that would exempt payments of Social Security benefits from being treated as taxable income. H.R. 9359, The Social Security Tax Freedom Act, introduced by Representative Jefferson Van Drew (NJ-2), would exempt Social Security payments from the federal income tax. Because many New Jerseyans who are currently recipients of Social Security benefits have gross incomes greater than $25,000, the federal government should exempt all such payments from federal income tax in order to provide greater financial security for those who rely on the federal social insurance program. Exempting Social Security payments from the federal income tax, regardless of a beneficiary's gross income from other sources, would provide more assistance to hardworking Americans.

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Owen Henry (R)*, 

Introduced in the Senate, Referred to Senate Health, Human Services and Senior Citizens Committee (on 01/14/2025)

Official Document