Taxation of Social Security Benefits: A Stealth Tax Increase - Social Security Intelligence; Devin Carroll
A series of inflation-driven cost-of-living adjustments can be both a positive and a negative for retirees, as many will find out when filing their federal income tax returns in future years. This is simply because the thresholds for federal income taxation of Social Security benefits have not been adjusted for decades. When the taxation provision was enacted (originally in 1983 then adjusted–upward–in1993), the expectation was that a small number of taxpayers would be affected. This provision, however, now snares well more than half of senior tax filers.
Social Security consultant Devin Carroll, in a post on www.socialsecurityintelligence.com, takes a look at the history of this taxation issue. Carroll traces the history of the legislative changes that resulted from the 1983 and 1993 studies, and touches on proposals that have surfaced in Congress to eliminate the tax. As he points out, the sticking point has been, and will continue to be, the fact eliminating this portion of Social Security’s income stream ($37.6 billion in 2021) aggravates the program’s already tenuous financial future. So, any change to this taxation issue can likely only happen as part of a larger Social Security reform proposal.
Read Devin Carroll’s analysis of this taxation issue here, and know that AMAC Action is focused on legislation addressing the potential for alteration of this burdensome tax on seniors.