WASHINGTON, D.C. – Today, U.S. Senator Pete Ricketts (R-NE) introduced the Social Security Check Tax Cut Act. The bill begins a total phase out of federal taxes on Social Security benefits. The bill was modeled after a successful effort to eliminate state taxes on Social Security benefits initiated when Ricketts was Governor of Nebraska. The Social Security Check Tax Cut Act is the third piece of legislation in Ricketts’ “Proven Nebraska Solutions, Ready for America” package.
“All Social Security benefits should be completely tax-free. My bill helps us get there in a fiscally responsible way,” said Senator Ricketts. “During my time as Governor, we provided major relief to seniors by phasing out state taxes on Social Security benefits and its time the federal government did the same. By passing this bill, we can take the first step in boosting the retirement income of millions of seniors in Nebraska and across the country.”
As Governor in 2022, Ricketts signed LB873 into law to phase in the elimination of state taxes on Social Security benefits over a period of years. The Social Security Check Tax Cut Act would similarly phase out federal taxes on Social Security benefits, beginning with a 10% cut in year one and increasing to 20% in year two. Congress can continue phasing out the tax by 10% a year and make all Social Security income tax free by 2033.
Bill text can be found here.
From its creation in 1935, Social Security has been the backbone of most Americans’ retirement plans. According to the Social Security Administration, nearly nine out of ten people aged 65 and older received a Social Security benefit as of June 30 of this year. From 1935 until 1983, Social Security benefits were untaxed, recognizing that workers already paid into Social Security via the payroll tax each pay period. In 1983, 50% of Social Security benefits became taxable. In 1993, President Bill Clinton signed a bill into law making 85% of benefits taxable.