Urges President and Congress to exempt Social Security benefits from federal income tax.

AR132

ASSEMBLY RESOLUTION No. 132

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MAY 4, 2026

Sponsored by:

Assemblyman� GREGORY P. MCGUCKIN

District 10 (Monmouth and Ocean)

Co-Sponsored by:

Assemblywoman Fantasia and Assemblyman Scharfenberger

SYNOPSIS

���� Urges President and Congress to exempt Social
Security benefits from federal income tax.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Assembly
Resolution
urging the federal government to
exempt Social Security benefits from federal income tax.

Whereas,

The Social Security Act was enacted on August 14, 1935 to provide assistance to
the nation�s elderly population by establishing a federal social insurance
system; and

Whereas,

The first Social Security benefits were paid in 1937 as one-time, lump-sum
payments, but in 1940, benefits were instead paid out in the form of monthly
checks mailed to qualified senior citizen recipients; and

Whereas,

Over time, eligibility for Social Security has incrementally broadened from
originally providing benefits only to retired workers over the age of 65 to now
paying benefits to survivors of deceased workers, dependents of retired
workers, disabled workers and their dependents, and early retirees; and

Whereas,

The estimated average monthly Social Security retirement benefit payment for
January 2024 was $1,907, which equates to roughly $23,000 a year; and

Whereas,

As of June 30, 2024, nearly 90 percent of individuals aged 65 and older receive
a Social Security benefit, with those benefits representing approximately 30
percent of their total income; and

Whereas,

Retired workers and their dependents represent just 78 percent of total Social
Security benefits paid, as nearly a quarter of all benefits go to disabled
workers and their dependents as well as survivors of deceased workers; and

Whereas,

Prior to 1984, Social Security benefits were considered exempt from federal
income taxes; and

Whereas,

Following the recommendations of the National Commission on Social Security
Reform in 1983, federal legislation was enacted to permit the inclusion of up
to 50 percent of a beneficiary�s Social Security benefit as taxable income
under the federal income tax; and

Whereas,

Congress later enacted federal legislation in 1993 to tax up to 85 percent of a
beneficiary�s Social Security benefits if the beneficiary�s total income
exceeds certain thresholds; and

Whereas,

Currently, single filers with combined gross incomes between $25,000 and
$34,000 are required to pay federal income tax on up to 50 percent of their
Social Security benefit, whereas single filers with combined gross incomes
greater than $34,000 are required to pay tax on up to 85 percent of their
benefit; and

Whereas,

The income thresholds established during the Social Security reforms of the
1980�s and 1990�s have not increased since enactment and are not tied to
inflation; and

Whereas,

Despite the federal taxation of Social Security benefits, 41 states and the
District of Columbia do not levy a state personal income tax on Social Security
payments; and

Whereas,

The New Jersey Constitution expressly prohibits levying a state personal income
tax on payments received under the federal Social Security Act, the federal
Railroad Retirement Act, or any similar federal law subsequently enacted which
substantially reenacts the provisions of those laws; and

Whereas,

The exemption of Social Security benefits from income taxation provides much
needed relief to many of the State�s most financially vulnerable residents; and

Whereas,

It is estimated that one-third of the private sector workforce has no access to
private pension coverage and, amongst those individuals without access to an
employer-sponsored plan, half do not have any retirement savings; and

Whereas,

Although those who rely on Social Security for their retirement income have
contributed more than their fair share through years of payroll and income
taxes, the federal taxation of Social Security benefits unfortunately serves to
reduce the value of these benefits when they are needed most; and

Whereas,

By placing an additional tax burden on Social Security recipients, the federal
government fails to appreciate how essential every dollar of a Social Security
payment is to many Americans; and

Whereas,

Exempting all Social Security payments from the federal income tax would put
more dollars back in the pockets of many hardworking Americans at a marginal
cost to federal income tax revenues; and

Whereas,

Federal legislation has been introduced by Representative Jefferson Van Drew
(NJ-2) in the House of Representatives of the United States Congress, as H.R.
9359, The Social Security Tax Freedom Act, to exempt Social Security payments
from the federal income tax; now, therefore,

����
Be It
Resolved
by the General Assembly of the State
of New Jersey:

���� 1.��� This House urges the
President and Congress of the United States to enact legislation exempting
Social Security benefits from federal income tax.

���� 2.��� Copies of this
resolution, as filed with the Secretary of State, shall be transmitted by the
Secretary of the Senate to the President of the United States, the Majority
Leader of the United States Senate, the Speaker of the United States House of
Representatives, and each member of Congress elected from this State.

STATEMENT

���� This resolution urges the
President and Congress of the United States to enact legislation exempting
payments of Social Security benefits from federal income tax.

���� The Social Security
Administration was established in 1935 to provide general welfare to the
country�s elderly population through a federal social insurance system.� The
payments, commonly referred to as Social Security benefits, were first paid out
in 1937 to retired workers over the age of 65.� Since then, the breadth of
Social Security benefits has expanded to also provide for payments to early
retirees, disability payments, survivors benefits, and payments to dependents
of beneficiaries.

���� The average monthly Social
Security retirement benefit is about $1,900, which equals roughly $23,000 in
annual gross income for a beneficiary.� Almost 90 percent of individuals aged
65 or older in the United States receive some form of Social Security benefit,
with these benefits representing approximately 30 percent of their total annual
income.� Additionally, over 20 percent of Social Security beneficiaries are not
retirees but rather recipients of disability payments, survivor�s benefits, or
dependent�s benefits.

���� Prior to 1984, Social Security
benefits were considered exempt from federal income taxes.� Under current
federal law, single filers who file a federal income tax return and have
combined gross income greater than $25,000 are required to pay federal income
tax on up to 50 percent of their Social Security benefit.� Single filers with
combined gross income greater than $34,000 are required to pay federal income
tax on up to 85 percent of their benefit.� These income thresholds have also
not been adjusted to account for inflation occurring since the 1990s.

���� While Social Security benefits
have been treated as taxable income under the federal personal income tax since
1984, the New Jersey Constitution expressly prohibits levying a state personal
income tax on Social Security benefits.� In addition to New Jersey, 40 states
and the District of Columbia do not levy a state personal income tax on Social
Security payments.� By placing an additional tax burden on Social Security
recipients, the federal government fails to appreciate how essential every
dollar of a Social Security payment is to many Americans.

���� Legislation has been
introduced in the House of Representatives of Congress that would exempt
payments of Social Security benefits from being treated as taxable income.�
H.R. 9359, The Social Security Tax Freedom Act, introduced by Representative
Jefferson Van Drew (NJ-2), would exempt Social Security payments from the
federal income tax.� Because many New Jerseyans who are currently recipients of
Social Security benefits have gross incomes greater than $25,000, the federal
government should exempt all such payments from federal income tax in order to
provide greater financial security for those who rely on the federal social
insurance program.� Exempting Social Security payments from the federal income
tax, regardless of a beneficiary�s gross income from other sources, would
provide more assistance to hardworking Americans.