119-s2716

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2716 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 2716

 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 SENATE OF THE UNITED STATES

 September 4, 2025

 Mr. Gallego introduced the following bill; which was read twice and 
 referred to the Committee on Finance

_______________________________________________________________________

 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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