Date: April 07, 1995
THE HOUSE PASSES H.R. 1215
THE "CONTRACT WITH AMERICA TAX RELIEF ACT OF 1995"
On April 5. 1995. the House of Represenlatives passed H.R. 1215 by a vote of 246-188. As passed, the bill contains two SSA-related provisions: (1) repeal of the increase in tax on Social Security benefits; and (2) increase of the retirement earnings limit.
Repeal of Increase in Tax on Social Security Benefits
- Repeals the 1993 taxation provision that increased the taxable portion of Social Security and Railroad Retirement Tier I benefits from 50 to 85 percent for single beneficiaries whose adjusted gross income is over $34,000 and married beneficiaries filing jointly whose adjusted gross income is over $44,000.
Increase in the Earnings Test Annual Exempt Amount
- Beginning in 1996, gradually raise the earnings limit for the retirement earnings test (RET) for beneficiaries who have attained normal retirement age to $30,000 by 2002 (compared with $14,760 under current law based on the intermediate assumptions in the Trustees Report). The applicable 1996 exempt amount under current law is $11,520. Exempt amounts under the bill would be:
The provision would phase-in the repeal of the higher rate for taxpayers with incomes
in excess of the above thresholds as follows:
For taxable years beginning after December 31, 1999, Social Security and Railroad Retirement Tier 1 benefits would be treated as under the law prior to 1994 (no more than 50 percent of benefits taxable).
Adjustment in Exempt Amount of Retirement Earnings Test
Gradually raises the earnings limit for those age 65 to 69 to $30,000 by the year 2000. The increase would be phased-in over 5 years as follows:
The provision would be effective for taxable years beginning after 1995.