A new bill has just been introduced to change Social Security yet again. I have all the details and what you need to know right here on the topic, Yet again, another new bill has hit the table in Congress to change Social Security in a pretty big way, which will impact millions upon millions of beneficiaries and some of you right here in the community. So let’s get into it and talk to all the details and what you need to know about this new bill as well as how it’s going to impact your monthly benefits.
As I am your one and only daily advocate, I’m here for you in any way that I possibly can be. Watching all this new information as it’s hitting the wire each and every day. Taking all that information. Doing all the necessary research and breaking it all down into these short topics so you can stay updated with what is actually going on right now as things are changing incredibly fast. Especially with all these new announcements coming out of the administration, The President, Lawmakers, Congress, and all these new bills and packages Proposals, and amendments. Reform to very important fixed income benefits. As well as anything in regards to money checks Raises The benefits programs. Stimulus or anything else along these lines.
And please remember, I am here for you in any way that I possibly can be. That’s my dedication and my commitment to you in this community. I’m on your team, I’m right here by your side, so please remember that and I will continue to keep that commitment going forward as that’s my dedication and my promise to you and the community. All right, thanks again. Let’s get into it and talk about this new bill that just hit the table to change Social Security.
Yeah, another new bill that we could add to the massive pile of all the bills out there already. So seriously, the stack is getting pretty tall these days of all these new builds and proposals hitting the table in Congress to change Social Security. It seems like all of these people in Congress have their own little twist on what they want to do to Social Security and again, they keep introducing it, but at the end of the day, honestly, it’s pretty nice because realistically, if we had no activity on Social Security, it would not be a good thing. We’re getting a lot of activity on Social Security in Congress. So it’s good even though a lot of this has not actually happened yet and a lot of these bills are not really doing anything.
The fact of the matter is it’s going to take a lot of swings, just like baseball. You swing, you swing, you swing, and then all of a sudden, crack, you get a home run. Whoa. You know what I mean? So that’s what we got to wait for, right?
We got to wait for that crack. Anyway, I don’t know anything about baseball, but I’m pretty sure I’ve heard a bat hitting a baseball and makes a nice crack, right? I like it. Anyway, let’s talk about the bill here and stop talking about baseball. We can talk about that in a different video, but yeah, anyway, so the new bill that was just introduced came out of Representative Angie Craig and it is titled You Earned It, You Keep It Act, which, by the way, I love the name of the bill because realistically, if you’re receiving Social Security benefits, you’ve already earned those benefits, right?
You’ve paid in through years and years and years of service. You probably spent decades of your life earning those benefits, right? You worked for all those years. You paid in thousands, probably tens of thousands of dollars in Social Security taxes, and now you earned it. And by all means you should keep it.
So I love the name of this bill. You earned it. You keep it. Act by Angie Craig All right? So here’s what it comes down to.
Basically, what she wants to do with this is eliminate all federal taxes on Social Security benefits. Did you know that millions of Social Security beneficiaries pay federal taxes on their benefit? Yeah, it’s true. And guess what? Right now, in 2022, as I record this video, we’re looking at a massive, massive raise as a result of the Cola in 2023 from millions of Social Security beneficiaries.
Guess what is one of the unintended consequences of a massive cost of living adjustment. It’s going to push some people’s income into the category where now you’re going to be taxed. So right now, in 2022, if you’re not taxed on your Social Security benefits, look out, because next year you might be, because this massive raise that will be coming may push many people into the category where now you’re going to pay taxes on your benefit. That’s why this bill you earned it. You keep it.
Act by Angie Craig is so incredibly important. So just want to throw that out there because that’s very important to understand is that, yes, you might not be paying taxes now, but guess what, you might be relatively soon. And again, by all means, I feel like if you’re earning a fixed income benefit and you’ve spent years or decades of your life earning those benefits, by all means you should keep every penny of it. But again, that’s what this bill is talking about and that’s honestly just my opinion as well. I feel like it’s very important.
So let me throw this out there really quickly here as well, just so we’re on the same page here. And then I’ll get into the details of this bill. Remember, this is on the federal level. There’s a couple of different layers of taxes right now. There’s the federal government where you pay taxes on the federal level.
However, if you are in one of the states that does have state income taxes, which most states do, however, there’s a handful of states that do not have state income taxes. If you’re in one of the taxable states, remember, even though the federal government may not tax your Social Security benefit, the state might still come to you with their hand out asking for some of that money. So please remember that this might be limited on the federal level, but the state might still come to you and say, hey, pay up. You got to pay the state too. Okay?
So remember, just federal in this bill, all right? So let’s talk about it. But remember, on the state level, they could introduce some of these bills on the state level as well, but that’s going to be state by state. This is federal. Federal is all encompassing.
All right, let’s talk about the details. So this bill pretty cool stuff. What they want to do is eliminate the federal tax on Social Security benefits. Here’s how you can determine if your benefits would be taxable. A simple kind of a calculation and kind of a little synopsis on your situation.
However, I want to say this much. This is not accounting advice. This is not tax advice. This is not financial advice in any way, shape or form. I don’t know your situation.
Everybody’s situation is very different. But here are some general planters that you can take into consideration if you want to determine if your benefits will be taxable, here’s what it comes down to. Take your AGI adjusted gross income plus any taxable interest plus one half of your Social Security benefit. If that number all summed together equals $25,000 or more as an individual or head of household, you’re going to be looking at some taxes. If you are a married couple and all of those numbers AGI plus taxable interest plus one half of your Social Security benefit equals $32,000 or more, you’re going to be looking at some taxes.
If you’re below those thresholds, $25,000 as an individual or below $32,000 as a married couple. You might be fine. But again, I don’t know your situation. So please talk to your accountant, your CPA, to examine your situation a little bit further. So anyway, I want to throw that out there just for you to understand here, all right?
So here’s what it comes down to. They want to eliminate the federal taxes on Social Security benefits because millions of beneficiaries are currently paying taxes on their Social Security benefit. And realistically, just like the bill states, you earned it, you keep it, act. I love it. Yes.
So by all means, basically what Angie Craig is saying is that you spent your whole life earning those benefits you paid in. Now you’re living on a fixed income benefit. The last thing that they should be doing is taxing your benefit. Well, they actually changed that as well. There’s another change that they want to or that she is implementing in this bill as well.
So now that so many millions of beneficiaries would not be paying taxes on their benefits, what are they going to do about the tax revenue, right? They’re not just going to let that tax revenue go away and say, oh, we’re fine, we’ll be fine with all that tax revenue. Oh, no, they still want the money, right, but are they going to get it from Social Security beneficiaries? No, they’re going to go after higher-income individuals. Here’s what they want to do.
So in 2022, right now, the maximum Social Security earnings to be taxed by Social Security is $147,000. In other words, let’s just say that you earn $150,000, okay? The first $147,000 of that income that you earn is taxable by Social Security. The extra $3,000 from 147 to 150, that $3,000 is no longer taxable by Social Security. Okay?
So that’s what it comes down to. That’s the cap as of right now. However, that limit does raise a little bit every single year. However, in this new bill, Angie Craig is proposing that they raise that cap up to $250,000. So for those higher income individuals earning say $147,000 or $150,000 or $200,000 or $225,000 or even $249,000, $250,000 even, would pay taxes on Social Security on all of that income.
Because right now, anybody that earns any income over $147,000 is no longer taxable by Social Security. So the way that they would actually get that tax revenue that they would no longer be collecting from fixed income beneficiaries is they would be taxing higher income individuals by raising the threshold on Social Security taxes from 147 up to $250,000. That’s a lot more tax revenue that they’d be bringing in from higher income individuals and no longer collecting it from fixed income beneficiaries. So that’s where they would be getting the revenue from. Remember, when it comes down to any of these bills like this, where they want to change things as far as reducing benefits and or making sure that your benefits are no longer taxed, they’re never just going to let that tax revenue go away.
There’s no way they’re going to find the tax revenue in a different way. Well, that’s what they’re doing right here. If they’re passing all that taxes on that, they would be collecting from, say, seniors and people with disabilities and fixed income beneficiaries rather than collecting that tax from the fixed income and the lower income probably retirees and people with disabilities, they’re going to pass it on to high income people. That’s where they’re getting it from, right? So anyway, it’s a nice proposal.
Honestly, I kind of like it. With all the different proposals that are out there right now, I’d say this is probably one of the better ones. There’s a lot of them out there right now that are looking they’re okay, they’re not great, but there’s a lot of proposals out there to change Social Security and honestly, this is a pretty good one. However, to be totally fair, this is not going to impact everybody in any way, shape or form. There’s a lot of people out there that do get benefits well below the $25,000 threshold as an individual or $32,000 as a married couple.
Therefore, it’s not going to impact everybody. So even though that all of us here want a raise to benefit, we need some adjustments to benefits, we need other things to go on. Right now, this is not going to impact everybody, but all it’s going to really do is impact those individuals who have Social Security benefits coming in, as well as income maybe from other sources, things like this.
So anybody that’s maybe getting income of $25,000 or more or $32,000, that’s really all that is going to impact. So again, it’s not a race to benefit, but rather it’s essentially keeping more money into the pockets of fixed income beneficiaries by essentially not taking it away through tax revenues. So even though it’s not necessarily a raise, I guess you could look at it as a savings instead, right? So I guess pick what you want. Would you rather have a raise to benefits and pay taxes on it, or would you rather have no taxes taken out with no raise, therefore keeping more of your benefit?
I guess it’s a horse apiece, as some people could say, right. Anyway, my wife always laughs at me when I say that because, I don’t know, she thinks it’s something like our dads would say, right? She’s like, that’s funny. So she always thinks it’s funny when I say horsepiece. So anyway, she’ll probably think that’s funny.
But my point is you could either get a higher benefit and be taxed or maybe the same amount of benefit or pay no taxes or pay taxes on it, right. So the fact of the matter is it all comes out about the same. So no matter how we kind of cut it, it’s all going to come out about the same. So anyway, another new bill that we can add to the stack of all of them that are out there right now. Of course, I want to bring you this detail and let you know what’s going on here.
Again, this is not past it. This is something that still needs to make its way through the congressional process. In other words, it might take a while, right? We know how this whole thing goes. It needs to make its way through the House of Representatives.
It needs to make its way through the Senate and then, of course, signed into law by the President. Now remember, I’ve said this before and I want to say it again really quickly. We’ve seen this before, right? Before a midterm election, before any elections. And I’ve said this over the last few days here.
Between now and with the midterm elections actually coming in, we’re going to be seeing a lot of different proposals hitting the table out of these lawmakers. Why? Because they want to get the attention of the people. They want to get our attention before the midterm elections, right? They want to say something really nice.
They want to say something that’s going to impact people. They want to say something that we all agree with, that we can all say, yeah, I like that and then we vote for them. So again, this is not a political statement, it’s the fact of the matter. We know that this happens every single time before elections. We get a lot of promises.
So this is just another one coming out right now. And I’m not saying that this is necessarily a good thing or a bad thing. I’m just saying that is what we’re going to see going forward. However, it’s not such a bad thing either because remember, sometimes we get things when they make promises and then all of a sudden we hold them to it and then they have to follow through. Just like stimulus check number three, the one $400 that was promised to us back in January of 2021 when there was some campaigning going on, remember?
So again, just saying some of these promises before midterm elections and before elections actually take place are sometimes a really good thing because a lot of times it flows back to us in some way, shape or form. But then I also think that we all agree at the same time that there are also a lot of empty promises that never come into fruition. Anyway, I’ll keep you posted. But this is another bill, so I’ll add it to the stack along with the other tons and tons of proposals out there right now to change Social Security. But again, I want to bring this one to you so you can know what’s going on right now and how it may impact your money, your benefits, your lifestyle, and everything else going on right now.
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