# Plain Language Summary: You Earned It, You Keep It Act

This bill makes two major changes to how Social Security taxes work and how benefits are calculated. The first change eliminates federal income taxes on Social Security benefits—meaning if you receive Social Security, you won't have to count those benefits as income when filing your taxes. Currently, depending on your other income, up to 85% of your Social Security benefits can be taxed as regular income. Under this bill, that would stop completely.

The second major change raises the Social Security payroll tax cap from its current level (which adjusts yearly, around $160,000 in recent years) to $250,000. Here's what that means in practical terms: right now, you and your employer each pay 6.2% in Social Security taxes on your wages, but only up to the annual cap. Anything you earn above that cap isn't subject to Social Security tax. This bill would extend Social Security taxes to earnings above $250,000, meaning higher earners would pay more into the system. However, there's a catch—earnings above $250,000 wouldn't count toward calculating your future Social Security benefits. You'd pay the tax on those higher earnings, but they wouldn't increase your eventual benefit amount.

The bill also includes protections for low-income beneficiaries. People receiving Supplemental Security Income (SSI), Medicaid, or children's health insurance won't see their benefits reduced because of the changes to how Social Security is calculated. Additionally, the bill includes a provision to ensure Social Security trust funds don't lose money due to the elimination of income taxes on benefits—the government would make up any shortfall from general tax revenue. The changes would take effect starting in 2023 for most provisions.

You Earned It, You Keep It Act

You Earned It, You Keep It Act This bill excludes Social Security benefits from gross income for purposes of federal income taxes.