Back in July, when President Donald Trump signed the One Big Beautiful Bill into law, it was announced that “nearly 90% of Social Security beneficiaries will no longer pay federal income taxes on their benefits.” But what about the rest of us? In an effort to make that tax break more accessible, Arizona Senator Ruben Gallego recently introduced this You Earn It, You Keep It Act to the Senate floor in the hopes of eliminating taxes on Social Security benefits altogether. We have everything you need to know about the proposed act, including when Americans might benefit from it below.
What we know about the You Earn It, You Keep It Act
On Thursday, September 4, Gallego—a junior Democratic senator from Arizona—announced his You Earn It, You Keep It Act. It aims to permanently eliminate federal taxes on everyone’s Social Security benefits for all Americans without impacting the two United States Social Security trust funds, making it larger and more accessible than President Trump’s proposed tax break outlined in his One Big Beautiful Bill. According to the outline, “The You Earn It, You Keep It Act would eliminate federal taxes on Social Security. By expanding the Social Security payroll tax to cover earnings above $250,000 a year, the bill ensures high-earners pay their fair share and allows the Social Security Administration to continue making all payments on time and in full through 2058—24 years longer than the current projection of 2034.”
“Like a lot of Americans, I’ve been paying into Social Security since my first job at 14. 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,” Gallego said in a statement earlier this week. “Trump claimed he ended taxes on Social Security. My bill actually does it. Permanently.”
Following the initial announcement, several people voiced their support for the You Earn It, You Keep It Act, with Nancy Altman, the President of Social Security Works, an organization dedicated to expanding Social Security, Medicare and Medicaid benefits, saying in a statement, “Social Security Works enthusiastically endorses the You Earn It, You Keep It Act. The bill reduces the income taxes of millions of Americans by completely eliminating the taxation of Social Security benefits, while responsibly paying for the tax cut.”
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“Moreover, it ensures that all Social Security benefits will be paid in full and on time for the foreseeable future by requiring the wealthiest to contribute to Social Security at the same rate as the rest of us. We commend Senator Gallego for championing this important legislation.”
Gallego isn’t the first person to try to create something like this, though. Back in April, United States Representative Angie Craig from Minnesota tried to do the same thing under the same name. That Act is currently up for discussion on the House floor, meaning that it failed yet, but it also hasn’t been passed.
When will the You Earn It, You Keep It Act take effect?
Currently, there is no official word on when the You Earn It, You Keep It Act will take effect. For it to do so, it would need to pass both the House of Representatives and the Senate. If that happens, the president would then sign it into law.
As of publication, President Trump has not commented on the You Earn It, You Keep It Act, so there is no word on whether he would sign it into law if the documents were to reach his desk.
How do taxes on Social Security work?
A person’s income determines taxes on Social Security—more specifically, the sum of their adjusted gross income, their exempt interest income and half of their Social Security benefits.
Under the current guidelines, individuals who earn $25,000 to $34,000 and married couples filing jointly who earn between $32,000 and $44,000 might be taxed as much as 50%. For those who earn more than that, either as a individual or as a married couple, that tax rate goes up to 85%.
The You Earn It, You Keep It Act would eliminate all of that, though, allowing beneficiaries to keep all the money they earn from their Social Security accounts.
