If you’re planning for retirement in North Texas, or already enjoying it, there’s a proposed piece of legislation that could put thousands of dollars back in your pocket annually and fundamentally change how you think about your real estate decisions.
Senator Ruben Gallego’s “You Earned It, You Keep It Act” aims to eliminate ALL federal income taxes on Social Security benefits for over 55 million Americans. Whether this bill passes or not, understanding what it means for your financial picture and homeownership strategy is critical right now.(HR 2909)
Let me break down what’s happening, why it matters specifically for North Texas residents, and what you should be thinking about with your real estate plans.
What’s in the Proposed Bill?
The “You Earned It, You Keep It Act” has two main components:
- Complete elimination of federal income taxes on Social Security benefits for all recipients
- Expansion of Social Security payroll taxes to wages above $250,000 (currently capped at $176,100)
According to Senator Gallego’s office, this combination would extend Social Security’s solvency by 24 years while putting more money directly into retirees’ pockets.(Tax Free Social Security)
How Social Security Gets Taxed Today
Right now, the federal government taxes your Social Security benefits based on your “combined income” which includes your adjusted gross income, tax-exempt interest, and half of your Social Security benefits.(SS Taxes FAQ)
Current federal taxation thresholds:
For Single Filers:
- Combined income under $25,000: No federal tax on benefits
- Combined income $25,000-$34,000: Up to 50% of benefits taxed
- Combined income over $34,000: Up to 85% of benefits taxed
For Married Couples Filing Jointly:
- Combined income under $32,000: No federal tax on benefits
- Combined income $32,000-$44,000: Up to 50% of benefits taxed
- Combined income over $44,000: Up to 85% of benefits taxed
Here’s the kicker: these thresholds haven’t been adjusted for inflation since 1984. That means every year, more middle-class retirees find themselves paying taxes on their Social Security benefits that previous generations didn’t.(Taxes on Social Security)
Why North Texas Residents Are Already Ahead
Before we even talk about potential federal changes, Texas gives you massive advantages that most of the country doesn’t have:
Texas has ZERO state income tax on:
- Social Security benefits
- Retirement account distributions
- Pension income
Property tax benefits for homeowners 65 and older:
- Additional $10,000 homestead exemption (stacks on top of the standard $100,000 exemption)
- Permanent freeze on school district property taxes starting the year you turn 65
- Many cities offer additional exemptions (Dallas recently increased theirs to $175,000 for residents 65+)
If your home in Dallas is valued at $218,750 or less and you’re over 65, you currently pay ZERO city property tax.(Texas Comptroller)
Now imagine layering federal tax elimination on Social Security on top of these existing Texas advantages. That’s a completely different financial picture for your retirement.
What This Could Mean for Your Wallet
Let’s talk real numbers:
Middle-income retired couples could see annual savings of $2,000-$4,000
Higher-income retirees could save $100,000 or more over their lifetime
Tax planning flexibility becomes dramatically simpler when Social Security taxation isn’t in the equation
Real-World Example
Let’s say you’re 63 and planning to sell your $650,000 home in two years to downsize. Under current law, the capital gain from that sale could push your combined income high enough that 85% of your Social Security benefits become taxable.
If this bill passes? That entire concern disappears. Your home sale doesn’t impact your Social Security taxation because there IS no Social Security taxation.
That’s the kind of financial flexibility that changes retirement strategies.
How This Could Impact North Texas Real Estate
If Social Security benefits become federally tax-free, here’s what I’m anticipating in our local market:
Increased buying power for retirees – More disposable income means stronger financial positions and less price sensitivity
Growing demand in senior-focused communities – Expect increased interest in 55+ communities throughout Collin County, Denton, and the more affluent DFW suburbs
More downsizing flexibility – Retirees who felt stuck due to tax implications of selling suddenly have more options
Multi-generational housing becomes more viable – Extra cash flow makes it easier for families to keep properties, build accessory dwelling units, or execute strategic estate transfers
Estate Planning and Legacy Implications
Tax-free Social Security doesn’t just impact your monthly budget, it changes your entire estate planning picture.
With potentially thousands more in annual disposable income, you’ll have new opportunities for:
- Trust and inheritance strategies
- Charitable giving through qualified distributions
- Wealth transfer to children and grandchildren
- Strategic property transfers and ownership structures
This is the kind of change that requires sitting down with your estate planning attorney, CPA, and real estate advisor to completely rethink your long-term strategy.
What You Should Be Doing Right Now
Whether this bill passes or not, now is the time to review your retirement real estate strategy:
If you’re approaching 65:
- Review your current property tax exemptions and ensure you’re maximizing every available benefit
- Consider the timing of any major real estate transactions relative to your retirement date
- Evaluate whether your current home fits your 10-20 year plan
If you’re already retired:
- Assess whether tax-free Social Security would change your housing decisions
- Review your estate plan with potential increased cash flow in mind
- Consider whether you’re in the right property for the long term
If you’re helping aging parents:
- Discuss how legislative changes might impact their financial flexibility
- Review whether their current housing situation still makes sense
- Consider family real estate strategies that might become more viable with increased cash flow
The Texas Advantage Isn’t Going Anywhere
Regardless of what happens with federal legislation, Texas remains one of the most tax-friendly states for retirees in the entire country.
No state income tax. Generous property tax exemptions. No estate or inheritance taxes. Lower cost of living compared to other major metros. World-class healthcare infrastructure.
People are moving to North Texas for retirement in record numbers, and any federal tax changes would only accelerate that trend.
Questions You Should Be Asking
As you think about your real estate and retirement strategy, here are the key questions to consider:
- How would an extra $2,000-$4,000 annually change your housing plans?
- Does your current home fit your 10-20 year retirement vision?
- Are you maximizing all available Texas property tax exemptions?
- Have you reviewed your estate plan recently given potential legislative changes?
- If your parents are approaching retirement, have you discussed their housing strategy?
The Bottom Line
Legislative proposals like this don’t happen in a vacuum. They reflect broader recognition that current tax structures aren’t working for retirees, and that change is coming one way or another.
Whether the “You Earned It, You Keep It Act” passes in its current form, gets modified, or leads to different legislation, the conversation about Social Security taxation and retirement planning is heating up.
For North Texas homeowners, this is the time to be proactive—reviewing your strategy, understanding your options, and positioning yourself to take advantage of whatever changes ultimately arrive.
Your real estate decisions today should account for the retirement landscape of tomorrow. That requires working with professionals who understand not just real estate, but how taxation, estate planning, and legislative changes intersect with your homeownership strategy.
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Bobby Franklin – REALTOR®
Legacy Realty Group – Leslie Majors Team
Serving Ellis County & DFW
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Please consult with qualified legal and tax professionals regarding your specific situation.
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