A new bill, introduced in the Senate in August 2022 as the “You Earned It, You Keep It Act,” would change current law to make it so Social Security benefits are no longer taxable. This would not only help recipients of Social Security retirement benefits, but also people who receive Social Security Disability Insurance (SSDI) benefits. This would not only allow people to keep more benefits instead of paying them in taxes, it could also help to extend the solvency of the program itself.
What is This Bill?
The “You Earned It, You Keep It Act,” originally introduced in August 2022 and reintroduced last week in the House of Representatives, would change current law to make it so Social Security benefits are no longer taxable. Currently, certain types of Social Security benefits are counted as taxable income at up to 85% of their total benefits, meaning that people must not only report it on their tax forms, but also pay taxes on what they get. As a result, their benefits are diminished and lose a significant portion of what they would otherwise receive.
What Would it Do?
The bill would exempt Social Security benefits from being counted as taxable income, including SSDI benefits. Supplemental Security Income (SSI) benefits would not be affected, as that is already not counted as taxable income. In order to make up for the deficit, the law would remove the current cap on Social Security taxes, taxing people who make more than $250,000 per year. Currently, Social Security taxes are only applied to the first $168,600 a person makes per year, so this would significantly expand how much income could be taxed from high income earners.
What Impact Could This Have?
First and foremost, it would be extremely beneficial to SSDI recipients and others who receive benefits through the Social Security Administration. Without the need to pay taxes, they will be able to keep more of their benefits each month. It could also actually extend the lifespan of the Social Security program, since significant portions of the benefits paid out would not be lost to taxation.
What Should You Do?
If you or someone you love has a disability and cannot work as a result, you should consider applying for SSDI or SSI benefits. It can help you to get money to support yourself and your family while you are unable to work. The sooner you get in contact with them, the sooner they can get to work on your case.
If you or a loved one need assistance applying for SSDI or SSI benefits, it is important that you seek the guidance of an experienced Social Security Disability benefits lawyer. The lawyers at Sullivan & Kehoe, LLP have over 50 years of combined experience between its attorneys and are available to you or your loved one in obtaining Social Security Disability or Supplemental Security Income benefits. To schedule a consultation with our New York Social Security Disability benefits lawyers, call (631) 823-7155.
