Gallego Proposes Ending Social Security Taxes, Funding It With Payroll Levies Above $250,000
Updated
Updated · The Motley Fool · Jun 7
Gallego Proposes Ending Social Security Taxes, Funding It With Payroll Levies Above $250,000
2 articles · Updated · The Motley Fool · Jun 7
Summary
Sen. Ruben Gallego introduced the You Earn It, You Keep It Act in September 2025 to permanently end federal taxes on Social Security benefits.
The bill would offset the cost by extending Social Security payroll taxes beyond the 2026 wage cap of $184,500 to all annual earnings above $250,000.
About 50% of recipients of retirement, survivor and disability benefits can now owe federal tax on up to 85% of their benefits, while SSI remains untaxed.
The proposal follows a similar House bill from Rep. Angie Craig and separate Senate and House measures from Tommy Tuberville, Tim Sheehy and Thomas Massie, though partisan divisions leave all of them facing long odds.
Beyond taxing high earners, what other major reforms could permanently secure Social Security for decades to come?
Can eliminating Social Security taxes for seniors coexist with guaranteeing the fund's future for everyone?
The "You Earn It, You Keep It Act": Eliminating Social Security Taxes for 55 Million Retirees and Extending Solvency to 2058
Overview
The "You Earn It, You Keep It Act," introduced by Senator Ruben Gallego in September 2025, is a major proposal to reform Social Security taxation. It responds to retirees’ concerns about being "taxed twice" by aiming to permanently eliminate federal income taxes on Social Security benefits. To keep the program financially stable, the Act shifts the tax burden to high earners by introducing a new payroll tax on earnings above $250,000. This approach seeks to increase after-tax income for retirees, address fairness, and extend Social Security’s solvency, while also raising questions about future impacts as more people may face the new tax over time.