Fairness in Social Security Act of 2023
If enacted, HB4348 would significantly impact how social security benefits are treated under federal income tax law. This adjustment will allow beneficiaries who receive lump-sum payments, which may cover multiple past months of benefits, to not have those amounts negatively affect their household income calculations for tax purposes. As a result, seniors and disabled individuals relying on social security could experience a potential boost in disposable income, positively influencing their economic situation.
House Bill 4348, known as the Fairness in Social Security Act of 2023, seeks to amend the Internal Revenue Code of 1986 by excluding certain lump-sum social security benefit payments from the determination of household income for tax purposes. Specifically, the bill proposes that only lump-sum payments attributable to months within the taxable year should be included in modified adjusted gross income calculations. By making this adjustment, the bill aims to alleviate the tax burden on individuals receiving lump-sum social security benefits from prior taxable periods.
The bill has sparked discussions around its implications for both beneficiaries and tax revenue. Proponents argue that the exclusion of prior period lump-sum payments will help the elderly and low-income families by preventing unexpected tax liabilities that might arise from receiving such payments. However, critics may raise concerns about the potential loss of tax revenue and argue that equal treatment of all income is necessary for tax fairness. Additionally, there are debates on whether this change may lead to complications in tax filings and eligibility determinations for various assistance programs.