S. 5084: To amend the Internal Revenue Code of 1986 to apply inflation adjustments to the base amount and adjusted base amount for purposes of determining taxable social security benefits.

This bill would change how part of Social Security benefits are taxed. Under current law, certain Social Security benefits become taxable once a person’s income exceeds set dollar thresholds, known as the “base amount” and “adjusted base amount.” Those thresholds have been fixed for many years and are not automatically updated for inflation.

The bill would require those dollar thresholds to be adjusted for inflation starting with taxable years after 2026. In practical terms, that means the income levels used to decide whether Social Security benefits are taxable would rise over time as the cost of living increases. The bill ties the adjustment to an existing cost-of-living formula used elsewhere in the tax code, with a modification to use 2025 as the reference year.

The bill also says that after the inflation adjustment is calculated, any amount that is not a multiple of $100 must be rounded up to the next $100.

What this would change for taxpayers

• More retirees and other Social Security recipients could fall below the updated income thresholds.
• As a result, some people who would otherwise owe tax on part of their Social Security benefits might owe less tax or no tax on those benefits.
• The effect would grow over time because the thresholds would continue to rise with inflation.

What this would not do

• It would not eliminate taxes on Social Security benefits altogether.
• It would not change the amount of Social Security benefits people receive from the Social Security Administration.
• It would not change the tax rate; it would only change the income thresholds used to determine whether benefits are taxable.

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