AARP says No to taxing Social Security

From Mary Bethel, Lobbyist for AARP of NC in today's email

Tax Reform Legislation Stalls – AARP Says No to Taxing Social Security

Although discussions about tax reform have been front and center over the course of the last several weeks in the General Assembly, there is still no consensus among lawmakers on legislation to reform our state’s tax system. House Bill 998 entitled the Tax Simplification and Reduction Act was approved by the House on June 10. On June 12, Senate leadership rolled out a substantial revision to this bill in the Senate Finance Committee. This revision passed second reading in the Senate, but has now been sent back to the Senate Finance Committee while negotiations between the Senate, House, and Governor continue on this important issue.

Of particular concern to many AARP members is a provision in the Senate Proposed Committee Substitute for House Bill 998 that would tax Social Security benefits for some persons in our state with other sources of income. Under the Senate proposal, Social Security would be taxed based on a person’s federal adjusted gross income (AGI). The Senate proposal would exempt (referred to as zero tax bracket) $15,000 for a couple filing jointly and $7,500 for a single individual from the AGI. The amount left after this deduction would then be taxed at the proposed new flat income tax rate of 5.4% in 2014. The rate would drop to 5.25% in 2015 under the Senate plan.

AARP has been very visible and vocal in its opposition to the proposal to tax Social Security. An article in the Raleigh News and Observer on June 20 provided a good overview of this issue and AARP’s position.

Action Needed Now

AARP continues to encourage members to call their legislators to express their opinion regarding the proposal to tax Social Security. In particular, we ask that you call your Senator since the tax reform bill is in the Senate chamber and tell him/her “No Taxes on Social Security”.

To facilitate calling, AARP has established a toll free 800 number which you can call to be connected directly to your Senator’s office. This number is:


In addition, because it is also important that Governor McCrory continue to hear the message of “No Taxes on Social Security” click on to send an e-mail to the Governor to relay this message.

Other Concerns About The Tax Proposal

AARP is also concerned that with the level of tax cuts proposed in the tax reform bill, there will not be adequate funding for the state to provide essential services. For example, funding to support key programs that help seniors stay in their homes, such as home delivered meals and in-home aide services, are already facing large deficits. With the ever increasing number of older adults in need of services, more people will no longer be able to stay at home and may end up in more expensive long-term care arrangements if funding for needed services is not available.

An additional concern is that under the tax reform proposal, counties and municipalities could lose money. This could result in an increase in local property taxes which might significantly impact many older homeowners.

Where Things Stand Now

On Thursday, the House offered a compromise proposal to the Senate on the tax overhaul plan. Senate leaders have indicated they are reviewing this offer now. Needless to say, next week will be a big week for tax discussions in the state legislature.