S. 358: Reducing Excessive Taxation and Inefficiencies by Reforming Elder Exemptions to Support Fairness, Inflation Relief, and Simpler Taxes Act

This bill is titled the "Reducing Excessive Taxation and Inefficiencies by Reforming Elder Exemptions to Support Fairness, Inflation Relief, and Simpler Taxes Act," or the "RETIREES FIRST Act." Its main focus is to amend the Internal Revenue Code to increase the income thresholds for taxation of Social Security benefits.

Key Provisions

• Increased Income Thresholds: The bill proposes to increase the amounts at which Social Security benefits become taxable. Currently, up to 85% of Social Security benefits can be included as income depending on total income levels. This bill seeks to raise those income thresholds, allowing more individuals to receive a larger portion of their Social Security benefits without it being taxed.
• New Base Amounts: Under this legislation, the new base amounts would be set at $34,000 for individual filers and $68,000 for joint filers. This means individuals with income below these thresholds would not have to pay taxes on their Social Security benefits. A separate provision is included for certain married individuals who do not file jointly.
• Inflation Adjustments: The bill includes a mechanism to adjust these thresholds each year based on cost-of-living changes, ensuring that the thresholds keep pace with inflation starting from the tax year 2026 onwards. Any adjusted amounts that are not a multiple of $1,000 would be rounded to the nearest $1,000.
• Impact on Social Security Trust Funds: The bill includes provisions to ensure that the Social Security trust funds are not adversely affected by these changes. It allocates appropriations from the Treasury to offset reductions in transfers to these funds due to the increase in the income thresholds.
• Rescission of Non-Security Discretionary Appropriations: For fiscal years starting from 2027, the bill mandates a rescission of funds based on the total cost incurred from the tax relief provided by increasing the income thresholds. This means that the government will cut back on discretionary spending by an amount equal to what is lost from Social Security tax revenues.
• Report Requirements: The bill also requires the Director of the Office of Management and Budget to report annually on the rescissions and their impact on the budget beginning in 2028.
• Effective Date: The proposed amendments would take effect starting from taxable years after December 31, 2025.

Relevant Companies