What Is the Senior Citizen Tax Elimination Act?

The Senior Citizen Tax Elimination Act is a proposed piece of federal legislation, not an existing law. Its purpose is to change how the United States government taxes the income of its older residents by eliminating federal income tax on Social Security benefits. It is a proposal that has been introduced in Congress but has not been enacted. Therefore, the current tax laws regarding senior income remain in effect.

Key Provisions of the Proposed Act

The central feature of the Senior Citizen Tax Elimination Act is the repeal of federal income tax on Social Security and Tier I railroad retirement benefits. Under the proposal, these benefits would no longer be considered part of a taxpayer’s gross income for federal tax purposes. This would reverse a policy that has subjected a portion of Social Security benefits to taxation for individuals with incomes above certain thresholds.

The proposed act is narrowly focused on these specific benefits. It does not include provisions to eliminate federal income tax on other forms of retirement income, such as pensions, 401(k) or IRA distributions, capital gains, interest, or dividends. To make the Social Security trust funds whole from the loss of tax revenue, the bill proposes using funds from the U.S. Treasury.

Determining Eligibility

Eligibility for the benefits of the Senior Citizen Tax Elimination Act is primarily based on age. The term “senior citizen” is defined by reaching a specific age, often 62 or 65, and an individual would need to meet this requirement to qualify.

Beyond age, the proposal applies to all individuals who meet the age criteria, regardless of their total income. Unlike many tax benefits that are phased out for higher-income earners, this act does not include income-based limitations, meaning a senior would receive the exemption whether their income is modest or substantial. The proposal focuses exclusively on the federal income tax system and would not affect any state or local income or sales taxes.

Legislative Status and Outlook

The Senior Citizen Tax Elimination Act has been introduced in various forms in the U.S. House of Representatives over multiple congressional sessions. A recent version of the bill is H.R. 1040, introduced in the 119th Congress on February 6, 2025, by Representative Thomas Massie. Upon introduction, such bills are referred to a congressional committee for review, in this case, the House Committee on Ways and Means.

Historically, these proposals have not advanced out of committee for a full vote. Despite attracting some cosponsors, the bills have failed to gain the broad bipartisan support necessary for passage. Concerns about the overall effect on federal revenue have prevented it from gaining legislative traction. The outlook for the act becoming law remains uncertain, as its path forward is challenging and would require overcoming significant fiscal and political hurdles.