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Internal Revenue Code, § 86. Social Security And Tier 1 Railroad Retirement Benefits

I.R.C. § 86(a) In General
I.R.C. § 86(a)(1) In General
Except as provided in paragraph (2), 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—
I.R.C. § 86(a)(1)(A)
one-half of the social security benefits received during the taxable year, or
I.R.C. § 86(a)(1)(B)
one-half of the excess described in subsection (b)(1).
I.R.C. § 86(a)(2) Additional Amount
In the case of a taxpayer with respect to whom the amount determined under subsection (b)(1)(A) exceeds the adjusted base amount, the amount included in gross income under this section shall be equal to the lesser of—
I.R.C. § 86(a)(2)(A)
the sum of—
I.R.C. § 86(a)(2)(A)(i)
85 percent of such excess, plus
I.R.C. § 86(a)(2)(A)(ii)
the lesser of the amount determined under paragraph (1) or an amount equal to one-half of the difference between the adjusted base amount and the base amount of the taxpayer, or
I.R.C. § 86(a)(2)(B)
85 percent of the social security benefits received during the taxable year.
I.R.C. § 86(b) Taxpayers To Whom Subsection (a) Applies
I.R.C. § 86(b)(1) In General
A taxpayer is described in this subsection if—
I.R.C. § 86(b)(1)(A)
the sum of—
I.R.C. § 86(b)(1)(A)(i)
the modified adjusted gross income of the taxpayer for the taxable year, plus
I.R.C. § 86(b)(1)(A)(ii)
one-half of the social security benefits received during the taxable year, exceeds
I.R.C. § 86(b)(1)(B)
the base amount.
I.R.C. § 86(b)(2) Modified Adjusted Gross Income
For purposes of this subsection, the term “modified adjusted gross income” means adjusted gross income—
I.R.C. § 86(b)(2)(A)
determined without regard to this section and sections 135, 137, 221, 222, 911, 931, and 933, and
I.R.C. § 86(b)(2)(B)
increased by the amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax.
I.R.C. § 86(c) Base Amount And Adjusted Base Amount
For purposes of this section—
I.R.C. § 86(c)(1) Base Amount
The term “base amount” means—
I.R.C. § 86(c)(1)(A)
except as otherwise provided in this paragraph, $25,000,
I.R.C. § 86(c)(1)(B)
$32,000 in the case of a joint return, and
I.R.C. § 86(c)(1)(C)
zero in the case of a taxpayer who—
I.R.C. § 86(c)(1)(C)(i)
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
I.R.C. § 86(c)(1)(C)(ii)
does not live apart from his spouse at all times during the taxable year.
I.R.C. § 86(c)(2) Adjusted Base Amount
The term “adjusted base amount” means—
I.R.C. § 86(c)(2)(A)
except as otherwise provided in this paragraph, $34,000,
I.R.C. § 86(c)(2)(B)
$44,000 in the case of a joint return, and
I.R.C. § 86(c)(2)(C)
zero in the case of a taxpayer described in paragraph (1)(C).
I.R.C. § 86(d) Social Security Benefit
I.R.C. § 86(d)(1) In General
For purposes of this section, the term “social security benefit” means any amount received by the taxpayer by reason of entitlement to—
I.R.C. § 86(d)(1)(A)
a monthly benefit under title II of the Social Security Act, or
I.R.C. § 86(d)(1)(B)
a tier 1 railroad retirement benefit.
I.R.C. § 86(d)(2) Adjustment For Repayments During Year
I.R.C. § 86(d)(2)(A) In General
For purposes of this section, the amount of social security benefits received during any taxable year shall be reduced by any repayment made by the taxpayer during the taxable year of a social security benefit previously received by the taxpayer (whether or not such benefit was received during the taxable year).
I.R.C. § 86(d)(2)(B) Denial Of Deduction
If (but for this subparagraph) any portion of the repayments referred to in subparagraph (A) would have been allowable as a deduction for the taxable year under section 165, such portion shall be allowable as a deduction only to the extent it exceeds the social security benefits received by the taxpayer during the taxable year (and not repaid during such taxable year).
I.R.C. § 86(d)(3) Workmen's Compensation Benefits Substituted For Social Security Benefits
For purposes of this section, if, by reason of section 224 of the Social Security Act (or by reason of section 3(a)(1) of the Railroad Retirement Act of 1974), any social security benefit is reduced by reason of the receipt of a benefit under a workmen's compensation act, the term “social security benefit” includes that portion of such benefit received under the workmen's compensation act which equals such reduction.
I.R.C. § 86(d)(4) Tier 1 Railroad Retirement Benefit
For purposes of paragraph (1), the term “tier 1 railroad retirement benefit” means—
I.R.C. § 86(d)(4)(A)
the amount of the annuity under the Railroad Retirement Act of 1974 equal to the amount of the benefit to which the taxpayer would have been entitled under the Social Security Act if all of the service after December 31, 1936, of the employee (on whose employment record the annuity is being paid) had been included in the term “employment” as defined in the Social Security Act, and
I.R.C. § 86(d)(4)(B)
a monthly annuity amount under section 3(f)(3) of the Railroad Retirement Act of 1974.
I.R.C. § 86(d)(5) Effect Of Early Delivery Of Benefit Checks
For purposes of subsection (a), in any case where section 708 of the Social Security Act causes social security benefit checks to be delivered before the end of the calendar month for which they are issued, the benefits involved shall be deemed to have been received in the succeeding calendar month.
I.R.C. § 86(e) Limitation On Amount Included Where Taxpayer Receives Lump-Sum Payment
I.R.C. § 86(e)(1) Limitation
If—
I.R.C. § 86(e)(1)(A)
any portion of a lump-sum payment of social security benefits received during the taxable year is attributable to prior taxable years, and
I.R.C. § 86(e)(1)(B)
the taxpayer makes an election under this subsection for the taxable year, then the amount included in gross income under this section for the taxable year by reason of the receipt of such portion shall not exceed the sum of the increases in gross income under this chapter for prior taxable years which would result solely from taking into account such portion in the taxable years to which it is attributable.
I.R.C. § 86(e)(2) Special Rules
I.R.C. § 86(e)(2)(A) Year To Which Benefit Attributable
For purposes of this subsection, a social security benefit is attributable to a taxable year if the generally applicable payment date for such benefit occurred during such taxable year.
I.R.C. § 86(e)(2)(B) Election
An election under this subsection shall be made at such time and in such manner as the Secretary shall by regulations prescribe. Such election, once made, may be revoked only with the consent of the Secretary.
I.R.C. § 86(f) Treatment As Pension Or Annuity For Certain Purposes
For purposes of—
I.R.C. § 86(f)(1)
section 22(c)(3)(A) (relating to reduction for amounts received as pension or annuity),
I.R.C. § 86(f)(2)
section 32(c)(2) (defining earned income),
I.R.C. § 86(f)(3)
section 219(f)(1) (defining compensation), and
I.R.C. § 86(f)(4)
section 911(b)(1) (defining foreign earned income), any social security benefit shall be treated as an amount received as a pension or annuity.
(Added and amended by Pub. L. 98-21, title I, 121(a), title III, 335(b)(2)(A), Apr. 20, 1983, 97 Stat. 80, 130; Pub. L. 98-76, title II, 224(d), Aug. 12, 1983, 97 Stat. 424; Pub. L. 98-369, div. A, title IV, 474(r)(2), div. B, title VI, 2661(o)(1), July 18, 1984, 98 Stat. 839, 1158; Pub. L. 99-272, title XII, 12111(b), title XIII, 13204(a), Apr. 7, 1986, 100 Stat. 287, 313; Pub. L. 99-514, title I, 131(b)(2), title XIII, 1301(j)(8), title XVIII, 1847(b)(2), Oct. 22, 1986, 100 Stat. 2113, 2658, 2856; Pub. L. 100-647, title I, 1001(e), title VI, 6009(c)(1), Nov. 10, 1988, 102 Stat. 3351, 3690; Aug. 10, 1993, Pub. L. 103-66, title XIII, Sec. 13215(a), (b), 107 Stat. 312; Aug. 15, 1994, Pub. L. 103-296, title III, Sec. 309(d); Aug. 20, 1996, Pub. L. 104-188, title I, 110 Stat. 1755; Pub. L. 105-277, title IV, Sec. 4003(a), Oct. 21, 1998, 112 Stat 2681; Pub. L. 107-16, title IV, Sec. 431(c)(1), June 7, 2001, 115 Stat. 38; Pub. L. 108-357, title I, Sec. 102(d)(1), Oct. 22, 2004, 11 Stat. 1418; Pub. L. 115-97, title I, Sec. 13305(b)(1), Dec. 22, 2017, 131 Stat. 2054.)
BACKGROUND NOTES
AMENDMENTS
2017 — Subsec. (b)(2)(A). Pub. L. 115-97, Sec. 13305(b)(1), amended subpar. (A) by striking “199”.
2004 — Subsec. (b)(2)(A). Pub. L. 108-357, Sec. 102(d)(1), amended subpar. (A) by inserting “199,” before “221”.
2001 — Subsec. (b)(2). Pub. L. 107-16, Sec. 431(c)(1), amended par. (2) by inserting “222,” after “221,”.
1998 — Subsec. (b)(2)(A). Pub. L. 105-277, Sec. 4003(a)(2)(B), inserted “221,” after “137,”.
1996 — Subsec. (b)(2). Pub. L. 104-188, Sec. 1704(t)(3), substituted “adjusted” for “adusted”.
Subsec. (b)(2)(A). Pub. L. 104-188, Sec. 1807, inserted “137,” before “911”.
1994 — Subsec. (d)(1). Pub. L. 103-296, Sec. 309(d), struck out the last sentence, which read as follows: ‘For purposes of the preceding sentence, the amount received by any taxpayer shall be determined as if the Social Security Act did not contain section 203(i) thereof.’ This amendment is effective for benefits received after December 31, 1995, in taxable years ending after such date.
1993 — Subsec. (a). Pub. L. 103-66, Section 13215(a)(2) substituted “Gross” with “(1) IN GENERAL. — Except as provided in paragraph (2), gross”, and redesignated paragraphs (1) and (2) as subparagraphs (A) and (B), respectively.
Subsec. (a)(2). Pub. L. 103-66, Section 13215(a)(1) added at the end of subsec. (a) a new paragraph (2).
Subsec. (c). Pub. L. 103-66, Section 13215(b) amended section 86(c) to read as above. Prior to amendment subsection (c) 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 at 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.”
1988 — Subsec. (b)(2)(A). Pub. L. 100-647, 6009(c)(1), inserted “135,” before “911”.
Subsec. (f)(4), (5). Pub. L. 100-647, 1001(e), redesignated par. (5) as (4) and struck out former par. (4) which read as follows: “section 221(b)(2) (defining earned income), and”.
1986 — Subsec. (b)(2)(A). Pub. L. 99-514, 131(b)(2), substituted “sections” for “sections 221,”.
Subsec. (c)(3)(A). Pub. L. 99-514, 1301(j)(8), substituted “section 7703" for “section 143”.
Subsec. (d)(4). Pub. L. 99-272, 13204(a), in amending par. (4) generally, designated existing provisions as introductory clause of par. (4), struck out “a monthly benefit under section 3(a), 3(f)(3), 4(a), or 4(f) of the Railroad Retirement Act of 1974”, and added cls. (A) and (B).
Subsec. (d)(5). Pub. L. 99-272, 12111(b), added par. (5).
Subsec. (f)(1). Pub. L. 99-514, 1847(b)(2), substituted “section 22(c)(3)(A)" for “section 37(c)(3)(A)”.
1984 — Subsec. (f)(1). Pub. L. 98-369, 2661(o)(1), added par. (1). Former par. (1) redesignated par. (2).
Pub. L. 98-369, 474(r)(2), substituted “section 32(c)(2)” for “section 43(c)(2)”.
Subsec. (f)(2)-(5). Pub. L. 98-369, 2661(o)(1), redesignated pars. (1) to (4) as (2) to (5), respectively.
1983 — Subsec. (a). Pub. L. 98-21, 335(b)(2)(A), inserted “(notwithstanding section 207 of the Social Security Act)”.
Subsec. (d)(4). Pub. L. 98-76 inserted “3(f)(3),” after “3(a),”.
EFFECTIVE DATE OF 2017 AMENDMENT
Amendment by Pub. L. 115-97, Sec. 13305(b)(1), effective for taxable years beginning after December 31, 2017. Pub. L. 115-141, Div .T, Sec. 101(c), added the following transition rule:
“(2) TRANSITION RULE FOR QUALIFIED PAYMENTS OF PATRONS OF COOPERATIVES.—
‘‘(A) IN GENERAL.—The amendments made by this section shall not apply to a qualified payment received by a taxpayer from a specified agricultural or horticultural cooperative in a taxable year of the taxpayer beginning after December 31, 2017, which is attributable to qualified production activities income with respect to which a deduction is allowable to the cooperative under section 199 of the Internal Revenue Code of 1986 (as in effect before the amendments made by this section) for a taxable year of the cooperative beginning before January 1, 2018. Any term used in this subparagraph which is also used in section 199 of such Code (as so in effect) shall have the same meaning as when used in such section.
‘‘(B) COORDINATION WITH SECTION 199A.—No deduction shall be allowed under section 199A of such Code for any qualified payment to which subparagraph (A) applies.’’
EFFECTIVE DATE OF 2004 AMENDMENT
Sec. 102(e) of Pub. L. 108-357 provided that: “The amendments made by this section shall apply to taxable years beginning after December 31, 2004.
EFFECTIVE DATE OF 2001 AMENDMENT
Sec. 431(d) of Pub. L. 107-16 provided that: “The amendments made by this section shall apply to payments made in taxable years beginning after December 31 2001.
Section 901 (Sunset of Provisions of Act) of Pub. L. 107-16, as amended by Pub. L. 107-358 and Pub. L. 111-312, Sec. 101(a), and struck by Pub. L. 112-240, Sec. 101(a)(1) (effective for taxable, plan, or limitation years beginning after Dec. 31, 2012, and estates of decedents dying, gifts made, or generation skipping transfers after Dec. 31, 2012), provided that:
“(a) IN GENERAL.--All provisions of, and amendments made by, this Act shall not apply—
“(1) to taxable, plan, or limitation years beginning after December 31, 2012, or
“(2) in the case of title V, to estates of decedents dying, gifts made, or generation skipping transfers, after December 31, 2012.
“(b) APPLICATION OF CERTAIN LAWS.—The Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 shall be applied and administered to years, estates, gifts, and transfers described in subsection (a) as if the provisions and amendments described in subsection (a) had never been enacted.
“(c) EXCEPTION.—Subsection (a) shall not apply to section 803 (relating to no federal income tax on restitution received by victims of the Nazi regime or their heirs or estates).”
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by section 4003(a)(2)(B) of Pub. L. 105-277 effective as if included in the provisions of the Taxpayer Relief Act of 1997 to which it relates.
EFFECTIVE DATE OF 1996 AMENDMENT
Sec. 1807(e) of Pub. L. 104-188 provided that: “The amendments made by this section shall apply to taxable years beginning after December 31, 1996.”
EFFECTIVE DATE OF 1993 AMENDMENT
Amendments by section 13215(a) and (b) of Pub. L. 103-66, shall apply to taxable years beginning after December 31, 1993.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1001(e) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
Section 6009(d) of Pub. L. 100-647 provided that: “The amendments made by this section [enacting section 135 of this title, amending sections 86, 219, and 469 of this title, and renumbering former section 135 as section 136 of this title] shall apply to taxable years beginning after December 31, 1989.”
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 131(b)(2) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1301(j)(8) of Pub. L. 99-514 applicable to bonds issued after Aug. 15, 1986, except as otherwise provided, see sections 1311-1318 of Pub. L. 99-514, set out as an Effective Date; Transitional Rules note under section 141 of this title.
Amendment by section 1847(b)(2) of Pub. L. 99-514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99-514, set out as a note under section 48 of this title.
Amendment by section 12111(b) of Pub. L. 99-272 applicable with respect to benefit checks issued for months ending after Apr. 7, 1986, see section 12111(c) of Pub. L. 99-272, set out as a note under section 909 of Title 42, The Public Health and Welfare.
Section 13204(b) of Pub. L. 99-272 provided that: “The amendment made by subsection (a) [amending this section] shall apply to any monthly benefit for which the generally applicable payment date is after December 31, 1985.”
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(r)(2) of Pub. L. 98-369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from such years, see section 475(a) of Pub. L. 98-369, set out as a note under section 21 of this title.
Amendment by section 2661 of Pub. L. 98-369 effective as though included in the enactment of the Social Security Amendments of 1983, Pub. L. 98-21, see section 2664(a) of Pub. L. 98-369, set out as a note under section 401 of Title 42, The Public Health and Welfare.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 98-76 applicable to benefits received after Dec. 31, 1983, in taxable years ending after such date, except for portions of lump-sum payments received after Dec. 31, 1983, if the generally applicable payment date for such portion was before Jan. 1, 1984, see section 227(b) of Pub. L. 98-76 set out as a note under section 72 of this title.
EFFECTIVE DATE
Section 121(g) of Pub. L. 98-21, as amended by Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“(1) In general.—Except as provided in paragraph (2), the amendments made by this section [enacting sections 86 and 6050F of this title, amending sections 85, 128, 861, 871, 1441, and 6103 of this title and section 3413 of Title 12, Banks and Banking, and enacting provisions set out as a note under section 401 of Title 42, The Public Health and Welfare] shall apply to benefits received after December 31, 1983, in taxable years ending after such date.
“(2) Treatment of certain lump-sum payments received after december 31, 1983.—The amendments made by this section shall not apply to any portion of a lump-sum payment of social security benefits (as defined in section 86(d) of the Internal Revenue Codeof 1986 [formerly I.R.C. 1954]) received after December 31, 1983, if the generally applicable payment date for such portion was before January 1, 1984.”
INDIVIDUAL INDIAN MONEY ACCOUNT LITIGATION SETTLEMENT
Section 101(f) of Pub. L. 111-291 provided that:
“(f) Taxation and Other Benefits—
“(1) INTERNAL REVENUE CODE- For purposes of the Internal Revenue Code of 1986, amounts received by an individual Indian as a lump sum or a periodic payment pursuant to the Settlement shall not be—
“(A) included in gross income; or
“(B) taken into consideration for purposes of applying any provision of the Internal Revenue Code that takes into account excludable income in computing adjusted gross income or modified adjusted gross income, including section 86 of that Code (relating to Social Security and tier 1 railroad retirement benefits).
“(2) OTHER BENEFITS— Notwithstanding any other provision of law, for purposes of determining initial eligibility, ongoing eligibility, or level of benefits under any Federal or federally assisted program, amounts received by an individual Indian as a lump sum or a periodic payment pursuant to the Settlement shall not be treated for any household member, during the 1-year period beginning on the date of receipt—
“(A) as income for the month during which the amounts were received; or
“(B) as a resource.”
TRANSFERS TO THE HOSPITAL INSURANCE TRUST FUND
Section 13215(c) of the Revenue Reconciliation Act of 1993 provides:
“(1) In general. —
“Paragraph (1) of section 121(e) of the Social Security Amendments of 1983 (Public Law 92-21) is amended by —
“(A) striking “There” and inserting: ‘(A) There’;
“(B) inserting ‘(i)’ immediately following ‘amounts equivalent to’; and
“(C) striking the period and inserting the following: ‘, less (ii) the amounts equivalent to the aggregate increase in tax liabilities under chapter 1 of the Internal Revenue Code of 1986 which is attributable to the amendments to section 86 of such Code made by section 13215 of the Revenue Reconciliation Act of 1993.
‘(B) There are hereby appropriated to the hospital insurance trust fund amounts equal to the increase in tax liabilities described in subparagraph (A)(ii). Such appropriated amounts shall be transferred from the general fund of the Treasury on the basis of estimates of such tax liabilities made by the Secretary of the Treasury. Transfers shall be made pursuant to a schedule made by the Secretary of the Treasury that takes into account estimated timing of collection of such liabilities.’
“(2) Definition. —
“Paragraph (3) of section 121(e) of such Act is amended by redesignating subparagraph (B) as subparagraph (C), and by inserting after subparagraph (A) the following new subparagraph:
‘(B) HOSPITAL INSURANCE TRUST FUND. — The term “hospital insurance trust fund” means the fund established pursuant to section 1817 of the Social Security Act.'.
“(3) Conforming amendment. —
“Paragraph (2) of section 121(e) of such Act is amended in the first sentence by striking ‘paragraph (1)’ and inserting ‘paragraph (1)(A)’.
“(4) Technical amendments. —
“Paragraph (1)(A) of section 121(e) of such Act, as redesignated and amended by paragraph (1), is amended by striking ‘1954’ and inserting ‘1986’.
PRIOR PROVISIONS
A prior section 86 was renumbered section 87 of this title.