H.R. 2266 — RETIREES FIRST Act

This section revises the inclusion of Social Security benefits in gross income by (1) increasing the base amounts to $34,000 for single filers (from $25,000) and $68,000 for joint filers (from $32,000); (2) simplifying the taxable portion to the lesser of 85% of benefits received or 85% of provisional income exceeding the base amount (i.e., eliminating the current tiered formula of 0%, 50%, and 85% rates); and (3) indexing the base amounts for inflation after 2025 using chained CPI (rounded to the nearest $1,000). (As background, under current law, up to 85% of benefits is taxable for recipients with provisional income—generally adjusted gross income plus tax-exempt interest and half of benefits—above fixed base amounts originally set in 1983 and 1993.) The section appropriates amounts to the Social Security and Railroad Retirement trust funds equal to any reduction in Treasury transfers attributable to these changes (thus holding the funds harmless). The amendments apply to taxable years beginning after December 31, 2025.

This section requires, for FY2027 and each fiscal year thereafter, a pro rata rescission from non-security discretionary appropriations made available by regular appropriation acts (i.e., annual acts or subdivisions thereof, including continuing resolutions, providing new budget authority for programs under Senate Appropriations subcommittees) in an amount equal to the total cost of reduced transfers to Social Security Act or Railroad Retirement Act of 1974 funds resulting from section 2(b), as determined by the Treasury Secretary. The rescission excludes security-category discretionary appropriations (as defined in 2 U.S.C. 900(c)), applies after full-year appropriations for the federal government, and requires the OMB Director to publish an annual report on such rescissions beginning January 1, 2028.