Section 1 Short title
This Act may be cited as the “No Tax on Social Security Act of 2021”.
No Tax on Social Security Act of 2021
A BILL
To amend the Internal Revenue Code of 1986 to exclude social security benefits from gross income, and for other purposes.
Sec. 2 Exclusion of social security benefits from gross income
In general— Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139H the following new section:
“139I. Social security and tier 1 railroad retirement benefits
“(a) Exclusion—Gross income shall not include social security benefits received by a taxpayer.
“(b) Social security benefit defined
“(1) In general—The term “social security benefit” means any amount received by the taxpayer by reason of entitlement to—
“(A) a monthly benefit under title II of the Social Security Act, or
“(B) a tier 1 railroad retirement benefit.
“(2) Workmen’s compensation benefits substituted for social security benefits—For purposes of this section, if, by reason of section 224 of the Social Security Act (or by reason of section 3(a)(1) of the Railroad Retirement Act of 1974), any social security benefit is reduced by reason of the receipt of a benefit under a workmen's compensation act, the term “social security benefit” includes that portion of such benefit received under the workmen's compensation act which equals such reduction.
“(3) Tier 1 railroad benefit—For purposes of paragraph (1), the term “tier 1 railroad retirement benefit” means—
“(A) the amount of the annuity under the Railroad Retirement Act of 1974 equal to the amount of the benefit to which the taxpayer would have been entitled under the Social Security Act if all of the service after December 31, 1936, of the employee (on whose employment record the annuity is being paid) had been included in the term “employment” as defined in the Social Security Act, and
“(B) a monthly annuity amount under section 3(f)(3) of the Railroad Retirement Act of 1974.”
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 the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) and the Social Security Equivalent Benefit Account established under section 15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(a)) an amount equal to the reduction in the transfers to such fund for such fiscal year by reason of this section. Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund had such amendments not been enacted.
Repeal of inclusion of social security and tier 1 railroad retirement benefits— Section 86 of such Code is repealed.
References to section 86— Any reference in any provision of law which refers to an amount not includible in gross income by reason of section 86 shall be treated as reference to an amount not includible in gross income by reason of this section.
Conforming amendments—
The table of sections for part II of subchapter B of chapter 1 is amended by striking the item relating to section 86.
The table of sections for part III of subchapter B of chapter 1 is amended by inserting after the item relating to section 139H the following new item:
Effective date— The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.