[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7084 Introduced in House (IH)]
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118th CONGRESS
2d Session
H. R. 7084
To amend the Internal Revenue Code of 1986 to repeal the inclusion in
gross income of social security benefits, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 25, 2024
Ms. Craig (for herself, Mr. Khanna, Ms. Caraveo, Mr. Davis of North
Carolina, Mrs. Peltola, Ms. Salinas, and Ms. Scholten) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Energy and Commerce, for a period
to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to repeal the inclusion in
gross income of social security benefits, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``You Earned It, You Keep It Act''.
SEC. 2. REPEAL OF INCLUSION IN GROSS INCOME OF SOCIAL SECURITY
BENEFITS.
(a) In General.--Section 86 of the Internal Revenue Code of 1986
(relating to social security benefits) is amended by adding at the end
the following new subsection:
``(g) Termination.--This section shall not apply to any taxable
year beginning after the date of the enactment of this subsection.''.
(b) Social Security Trust Funds Held Harmless.--There are hereby
appropriated (out of any money in the Treasury not otherwise
appropriated) for each fiscal year to each fund under the Social
Security Act (including the Federal Hospital Insurance Trust Fund) or
the Railroad Retirement Act of 1974 an amount equal to the reduction in
the transfers to such fund for such fiscal year by reason of section
86(g) of the Internal Revenue Code of 1986.
SEC. 3. DETERMINING WAGES AND SELF-EMPLOYMENT INCOME ABOVE CONTRIBUTION
AND BENEFIT BASE AFTER 2024.
(a) Determination of Wages Above Contribution and Benefit Base
After 2024.--
(1) Amendments to the internal revenue code of 1986.--
(A) Repeal of present law limitation.--Section
3121(a) of the Internal Revenue Code of 1986 is amended
by striking paragraph (1).
(B) Limitation on amount of wages.--Section 3121 of
the Internal Revenue Code of 1986 is amended by adding
at the end the following:
``(aa) Limitation on Amount of Wages.--
``(1) In general.--In the case of any calendar year in
which the contribution and benefit base (as determined under
section 230 of the Social Security Act) is less than $250,000,
for purposes of the taxes imposed by sections 3101(a) and
3111(a), the term `wages' does not include that part of the
remuneration which, after remuneration equal to such
contribution and benefit base with respect to employment has
been paid to an individual by an employer during the calendar
year with respect to which such contribution and benefit base
is effective, is paid to such individual by such employer
during the calendar year. The preceding sentence shall not
apply to that part of the remuneration paid to an individual
after remuneration of $250,000 with respect to employment has
been paid to such individual by an employer (or any person
related to, or acting on behalf of, such employer, as
determined by the Secretary) during the calendar year.
``(2) Successor employer.--If an employer (hereinafter
referred to as successor employer) during any calendar year,
acquires substantially all the property used in a trade or
business of another employer (hereinafter referred to as a
predecessor), or used in a separate unit of a trade or business
of a predecessor, and immediately after the acquisition employs
in his trade or business an individual who immediately prior to
the acquisition was employed in the trade or business of such
predecessor, then, for the purpose of determining whether the
successor employer has paid remuneration with respect to
employment equal to the contribution and benefit base (as
determined under section 230 of the Social Security Act) to
such individual during such calendar year, any remuneration
with respect to employment paid (or considered under this
paragraph as having been paid) to such individual by such
predecessor during such calendar year and prior to such
acquisition shall be considered as having been paid by such
successor employer.
``(3) Remuneration.--For purposes of this subsection, the
term `remuneration' does not include remuneration referred to
in any paragraph of subsection (a).''.
(C) Application to railroad retirement.--
(i) In general.--Section 3231(e)(2)(A) of
the Internal Revenue Code of 1986 is amended by
adding at the end the following new clause:
``(iv) Limitation on exclusion.--For
purposes of so much of the taxes imposed by
sections 3201(a), 3211(a), and 3221(a) as are
determined by reference to the rate in effect
under section 3101(a) or 3111(a)--
``(I) in the case of any calendar
year in which the contribution and
benefit base (as determined under
section 230 of the Social Security Act)
is less than $250,000, clause (i) shall
not apply to that part of the
remuneration paid to an individual
after remuneration of $250,000 for
services rendered as an employee has
been paid to such individual by an
employer (or any person related to, or
acting on behalf of, such employer, as
determined by the Secretary) during the
calendar year, and
``(II) in the case of any calendar
year in which such contribution and
benefit base equals or exceeds
$250,000, clause (i) shall not
apply.''.
(ii) Exclusion of remuneration which is not
treated as compensation.--Section
3231(e)(2)(A)(ii) of the Internal Revenue Code
of 1986 is amended by inserting ``or (iv)''
after ``under clause (i)''.
(D) Conforming amendment.--Section 3231(e)(2)(C) of
the Internal Revenue Code of 1986 is amended by
striking ``the second sentence of section 3121(a)(1)''
and inserting ``section 3121(aa)(2)''.
(2) Amendment to the social security act.--Section
209(a)(1)(I) of the Social Security Act (42 U.S.C.
409(a)(1)(I)) is amended by inserting before the semicolon at
the end the following: ``except that this subparagraph shall
apply only to calendar years for which the contribution and
benefit base (as so determined) is less than $250,000, and, for
such calendar years, only to the extent that remuneration with
respect to employment paid to such employee does not exceed
$250,000''.
(b) Determination of Self-Employment Income Above Contribution and
Benefit Base After 2024.--
(1) Amendments to internal revenue code of 1986.--
(A) In general.--Section 1402(b) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(b) Self-Employment Income.--
``(1) In general.--The term `self-employment income' means
the net earnings from self-employment derived by an individual,
except that such term shall not include net earnings from self-
employment if such net earnings for the taxable year are less
than $400.
``(2) Limitation on oasdi tax.--For purposes of section
1401(a), the term `self employment income' shall not exceed the
sum of--
``(A) the total compensation not in excess of the
contribution and benefit base (as determined under
section 230 of the Social Security Act) which is
effective for the calendar year in which such taxable
year begins, reduced by the amount of wages not in
excess of such base paid to such individual during the
taxable year, plus
``(B) the total compensation in excess of the
greater of--
``(i) $250,000, or
``(ii) the amount of wages paid to such
individual during the taxable year.
``(3) Definition and special rules.--
``(A) Total compensation.--For purposes of
paragraph (2), the term `total compensation' means the
sum of the net earnings from self-employment and the
amount of wages paid to such individual during the
taxable year.
``(B) Wages.--For purposes of this subsection, the
term `wages'--
``(i) includes such remuneration paid to an
employee for services included under an
agreement entered into pursuant to the
provisions of section 3121(l) (relating to
coverage of citizens of the United States who
are employees of foreign affiliates of American
employers) as would be wages under section
3121(a) if such services constituted employment
under section 3121(b), and
``(ii) includes compensation which is
subject to the tax imposed by section 3201 or
3211 (or would be so subject but for paragraph
(2) of section 3231(e)).
``(C) Nonresident aliens.--A nonresident alien
individual shall not be treated as an individual for
purposes of paragraph (1), except as provided by an
agreement under section 233 of the Social Security Act.
An individual who is not a citizen of the United States
but who is a resident of the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, or American Samoa shall
not, for purposes of this chapter, be considered to be
a nonresident alien individual.
``(D) Church employee.--In the case of church
employee income, the special rules of subsection (j)(2)
shall apply for purposes of paragraph (1).''.
(B) Conforming amendments.--
(i) Section 1402(j)(2)(A) of the Internal
Revenue Code of 1986 is amended by striking all
that precedes ``shall be applied'' and
inserting:
``(A) Separate application of de minimis rule.--
Subsection (b)(1)''.
(ii) Section 1402(j)(2)(B) of such Code is
amended by striking ``paragraph (2) of
subsection (b)'' and inserting ``subsection
(b)(1)''.
(2) Amendments to the social security act.--
(A) In general.--Section 211(b)(1) of the Social
Security Act (42 U.S.C. 411(b)) is amended--
(i) in subparagraph (I)--
(I) by inserting ``and before
2025'' after ``1974''; and
(II) by striking ``or'' at the end;
and
(ii) by adding at the end the following:
``(J) For any taxable year beginning in any
calendar year after 2024, an amount equal to--
``(i) $250,000, reduced (but not below
zero) by
``(ii) the sum of--
``(I) the part of the net earnings
from self-employment (if any) which is
not in excess of--
``(aa) the amount equal to
the contribution and benefit
base (as determined under
section 230) which is effective
for the calendar year in which
such taxable year begins, minus
``(bb) the amount of the
wages paid to such individual
during such taxable year, plus
``(II) the amount of the wages paid
to such individual during such taxable
year which is in excess of the amount
in subclause (I)(aa); or''.
(B) Phaseout.--Section 211(b) of the Social
Security Act (42 U.S.C. 411(b)) is amended by adding at
the end the following: ``Paragraph (1) shall apply only
to taxable years beginning in calendar years for which
the contribution and benefit base (as determined under
section 230) is less than $250,000.''.
(c) Special Rule for Wages From Multiple Employers Which Total in
Excess of $250,000.--
(1) In general.--Subchapter A of chapter 21 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 3103. SPECIAL RULES FOR REMUNERATION FROM MULTIPLE EMPLOYERS.
``(a) In General.--In the case of an employee receiving wages from
more than one employer during a calendar year, there is hereby imposed
a tax on such employee (for the last taxable year beginning in the
calendar year the wages are received) equal to the excess (if any) of--
``(1) the tax that would have been imposed by section
3101(a) if such wages had been received from one employer, over
``(2) the aggregate tax imposed by such section with
respect to such wages.
``(b) Coordination With Special Refund Provision.--No credit shall
be determined under section 31(b) with respect to any employee for any
taxable year unless the amount described in subsection (a)(1) with
respect to wages received during the calendar year in which such
taxable year begins exceeds the amount described in subsection (a)(2)
with respect to such wages, and the amount of such credit so determined
shall not exceed such excess.
``(c) Wages.--For purposes of this section, the term `wages' shall
have the same meaning as when used in section 1402(b).
``(d) Application to Tier I Railroad Retirement Tax.--In the case
of compensation (as defined in section 3231(e)), for purposes of
applying subsections (a) and (b), the reference to the tax that would
have been imposed by section 3101(a) shall be treated as including a
reference to so much of the tax that would have been imposed on such
compensation under section 3201(a) or 3211(a) (or would have been so
imposed but for paragraph (2) of section 3231(e)) as is determined by
reference to the rate of tax in effect under section 3101(a).''.
(2) Failure by individual to pay estimated income tax.--
Subsection (m) of section 6654 of the Internal Revenue Code of
1986 is amended to read as follows:
``(m) Special Rule for Certain Employment Taxes.--For purposes of
this section, the tax imposed by sections 3101(b)(2) (to the extent not
withheld) and the tax imposed by section 3103 shall be treated as taxes
imposed by chapter 2.''.
(3) Clerical amendment.--The table of sections for
subchapter A of chapter 21 of the Internal Revenue Code of 1986
is amended by adding at the end the following new item:
``Sec. 3103. Special rules for remuneration from multiple employers.''.
(d) Conforming Change to National Average Wage Index.--Section
209(k) of the Social Security Act (42 U.S.C. 409(k)) is amended--
(1) in paragraph (1), by inserting ``and to paragraph (4)''
after ``paragraph (2)''; and
(2) by adding at the end the following:
``(4) For each calendar year after 2024, the national average wage
index as defined in this section for such calendar year shall be deemed
to be the national average wage index determined under the preceding
paragraphs of this section increased by the following percentage:
``(A) For calendar years 2025 through 2030, 0.7 percent.
``(B) For calendar years 2031 through 2036, 0.8 percent.
``(C) For calendar years after 2037, 0.9 percent.''.
(e) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(c) shall apply to remuneration paid in calendar years after
2024.
(2) Self-employment income.--The amendments made by
subsection (b) shall apply to taxable years beginning after
December 31, 2024.
SEC. 4. INCLUDING EARNINGS OVER $250,000 IN SOCIAL SECURITY BENEFIT
FORMULA.
(a) Inclusion of Earnings Over $250,000 in Determination of Primary
Insurance Amounts.--Section 215(a)(1)(A) of the Social Security Act (42
U.S.C. 415(a)(1)(A)) is amended--
(1) in clause (ii), by striking ``and'' at the end;
(2) in clause (iii), by inserting ``and'' at the end; and
(3) by inserting after clause (iii) the following:
``(iv) 2 percent of the individual's excess average indexed
monthly earnings (as defined in subsection (b)(5)(A)).''.
(b) Definition of Excess Average Indexed Monthly Earnings.--Section
215(b) of the Social Security Act (42 U.S.C. 415(b)) is amended--
(1) by striking ``wages'' and ``self-employment income''
each place such terms appear and inserting ``basic wages'' and
``basic self-employment income'', respectively; and
(2) by adding at the end the following:
``(5)(A) An individual's excess average indexed monthly earnings
shall be equal to the amount of the individual's average indexed
monthly earnings that would be determined under this subsection by
substituting `excess wages' for `basic wages' and `excess self-
employment income' for `basic self-employment income' each place such
terms appear in this subsection (except in this paragraph).
``(B) For purposes of this subsection--
``(i) the term `basic wages' means that portion of the
wages of an individual paid in a year that does not exceed the
contribution and benefit base for the year;
``(ii) the term `basic self-employment income' means that
portion of the self-employment income of an individual credited
to a year that does not exceed an amount equal to the
contribution and benefit base for the year minus the amount of
the wages paid to the individual in the year;
``(iii) the term `excess wages' means that portion of the
wages of an individual paid in a year after 2024 in excess of
the higher of $250,000 or the contribution and benefit base for
the year; and
``(iv) the term `excess self-employment income' means that
portion of the self-employment income of an individual credited
to a year after 2024 in excess of the higher of $250,000 or
such contribution and benefit base for the year.''.
(c) Conforming Amendments.--Title II of the Social Security Act is
amended--
(1) in section 203(a)(6)(A) (42 U.S.C. 403(a)(6)(A)), by
striking ``85 percent of such individual's average indexed
monthly earnings'' and inserting ``the sum of 85 percent of
such individual's average indexed monthly earnings and 1
percent of such individual's excess average indexed monthly
earnings (as defined in section 215(b)(5)(A))'';
(2) in section 212 (42 U.S.C. 412), by inserting ``excess
average indexed monthly earnings,'' after ``average indexed
monthly earnings,'' each place it appears; and
(3) in section 215(e)(1) (42 U.S.C. 415(e)(1)), by
inserting ``and before 2025'' after ``after 1974''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to individuals who initially become eligible (within
the meaning of section 215(a)(3)(B) of the Social Security Act) for
old-age or disability insurance benefits under title II of the Social
Security Act, or who die (before becoming eligible for such benefits),
in any calendar year after 2024.
(e) Holding SSI, Medicaid, and CHIP Beneficiaries Harmless.--For
purposes of determining the income of an individual to establish
eligibility for, and the amount of, benefits payable under title XVI of
the Social Security Act, eligibility for medical assistance under the
State plan under title XIX (or a waiver of such plan), or eligibility
for child health assistance under the State child health plan under
title XXI (or a waiver of the plan), the amount of any benefit to which
the individual is entitled under title II of such Act shall be deemed
not to exceed the amount of the benefit that would be determined for
such individual under such title as in effect on the day before the
date of the enactment of this Act.
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