H.R. 2909

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2909 Introduced in House (IH)]

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119th CONGRESS
1st Session
H. R. 2909

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

April 14, 2025

Ms. Craig (for herself, Mr. Khanna, Ms. Pettersen, Mr. Casten, and Mr. 
Riley of New York) 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 2025.

(a) Determination of Wages Above Contribution and Benefit Base 
After 2025.--
(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 2025.--
(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 
2026'' 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 2025, 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 2025, 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 2026 through 2030, 0.7 percent.
``(B) For calendar years 2032 through 2036, 0.8 percent.
``(C) For calendar years after 2038, 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 
2025.
(2) Self-employment income.--The amendments made by 
subsection (b) shall apply to taxable years beginning after 
December 31, 2025.

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 2025 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 2025 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 2026'' 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 2025.
(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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