The “Stealth Tax” on Social Security Benefits - USA Today
Taxation of Social Security benefits first became law in 1983. At that time, single filers whose income from all sources (including half of SS benefits received) exceeded $25,000, and married filers whose total income exceeded $32,000, were required to pay income tax on 50% of the SS benefit they received during the tax year. Then, in 1993, another taxation threshold was added which made up to 85% of Social Security benefits taxable if the higher threshold – $34,000 for single filers and $44,000 for married – were exceeded. These laws were enacted to help shore up Social Security’s finances, which were in jeopardy at the time, and that caused only about 7% of filers to pay income tax on their SS benefits.
Fast forward to 2023. Although most Social Security benefit factors are adjusted annually for inflation, the thresholds at which Social Security benefits become taxable have never been increased. As a result, today more than half of all beneficiaries pay income tax on their Social Security benefits, a statistic which is viewed as unfair by many. But does that translate to Congressional action to mitigate taxation of Social Security benefits? So far, it hasn’t because taxes on benefits result in substantial income for the program, which is already facing financial insolvency in less than a decade. All of this is discussed in this USA Today article by Medora Lee.
For its part, the Association of Mature American Citizens (AMAC), parent company of the AMAC Foundation, is fighting hard in Washington D.C. to reform and adjust Social Security tax thresholds for inflation, thus helping millions of seniors keep more of their Social Security benefits. For more information on AMAC’s efforts on this front, email [email protected].