Social Security Benefits Tax Relief Act of 2005

Social Security Benefits Tax Relief Act of 2005 - Amends the Internal Revenue Code to repeal the 85 percent maximum tax rate on Social Security and Railroad Retirement benefits enacted by the Omnibus Budget Reconciliation Act of 1993. Appropriates, from the general fund, to the Hospital Insurance Trust Fund amounts equal to the reduction in revenues resulting from this repeal.

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 774 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                 S. 774

 To amend the Internal Revenue Code of 1986 to repeal the 1993 income 
               tax increase on Social Security benefits.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 13, 2005

  Mr. Bunning introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to repeal the 1993 income 
               tax increase on Social Security benefits.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Social Security Benefits Tax Relief 
Act of 2005''.

SEC. 2. REPEAL OF 1993 INCOME TAX INCREASE ON SOCIAL SECURITY BENEFITS.

    (a) Restoration of Prior Law Formula.--Subsection (a) of section 86 
of the Internal Revenue Code of 1986 (relating to social security and 
tier 1 railroad retirement benefits) is amended to read as follows:
    ``(a) In General.--Gross income for the taxable year of any 
taxpayer described in subsection (b) (notwithstanding section 207 of 
the Social Security Act) includes social security benefits in an amount 
equal to the lesser of--
            ``(1) one-half of the social security benefits received 
        during the taxable year, or
            ``(2) one-half of the excess described in subsection 
        (b)(1).''
    (b) Repeal of Adjusted Base Amount.--Subsection (c) of section 86 
of the Internal Revenue Code of 1986 is amended to read as follows:
    ``(c) Base Amount.--For purposes of this section, the term `base 
amount' means--
            ``(1) except as otherwise provided in this subsection, 
        $25,000,
            ``(2) $32,000 in the case of a joint return, and
            ``(3) zero in the case of a taxpayer who--
                    ``(A) is married as of the close of the taxable 
                year (within the meaning of section 7703) but does not 
                file a joint return for such year, and
                    ``(B) does not live apart from his spouse at all 
                times during the taxable year.''
    (c) Conforming Amendments.--
            (1) Subparagraph (A) of section 871(a)(3) of the Internal 
        Revenue Code of 1986 is amended by striking ``85 percent'' and 
        inserting ``50 percent''.
            (2)(A) Subparagraph (A) of section 121(e)(1) of the Social 
        Security Amendments of 1983 (Public Law 98-21) is amended--
                    (i) by striking ``(A) There'' and inserting 
                ``There'';
                    (ii) by striking ``(i)'' immediately following 
                ``amounts equivalent to''; and
                    (iii) by striking ``, less (ii)'' and all that 
                follows and inserting a period.
            (B) Paragraph (1) of section 121(e) of such Act is amended 
        by striking subparagraph (B).
            (C) Paragraph (3) of section 121(e) of such Act is amended 
        by striking subparagraph (B) and by redesignating subparagraph 
        (C) as subparagraph (B).
            (D) Paragraph (2) of section 121(e) of such Act is amended 
        in the first sentence by striking ``paragraph (1)(A)'' and 
        inserting ``paragraph (1)''.
    (d) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        taxable years beginning after December 31, 2005.
            (2) Subsection (c)(1).--The amendment made by subsection 
        (c)(1) shall apply to benefits paid after December 31, 2005.
            (3) Subsection (c)(2).--The amendments made by subsection 
        (c)(2) shall apply to tax liabilities for taxable years 
        beginning after December 31, 2005.

SEC. 3. MAINTENANCE OF TRANSFERS TO HOSPITAL INSURANCE TRUST FUND.

    There are hereby appropriated to the Federal Hospital Insurance 
Trust Fund established under section 1817 of the Social Security Act 
(42 U.S.C. 1395i) amounts equal to the reduction in revenues to the 
Treasury by reason of the enactment of this Act. Amounts appropriated 
by the preceding sentence shall be transferred from the general fund at 
such times and in such manner as to replicate to the extent possible 
the transfers which would have occurred to such Trust Fund had this Act 
not been enacted.
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