Taxation of Social Security Benefits - NAPA
Many Social Security beneficiaries are surprised to find that their benefits may be subject to federal income tax. This isn’t really new news because taxation of Social Security benefits actually started with rule changes enacted by Congress in 1983 and again in 1993 but, at the time, only a relatively few SS recipients were affected. The problem is that the income thresholds at which Social Security benefits become subject to federal income tax haven’t changed since originally enacted many years ago, and that means more and more people pay taxes on their benefits every year. The number of people who pay tax on their Social Security has risen from about 10% in 1983, to about 56% today and, with no reform legislation yet on the table, that trend will continue. It’s a bit of a double-edged sword, because Social Security income from federal taxes helps the program stay solvent, but the fairness of taxing Social Security benefits is an open issue, according to this article by Ted Godbout of the National Association of Plan Advisors (NAPA). Click here to read more.