Elderly Americans relying on Social Security for income may become subject to increased income taxes thanks to skyrocketing inflation.
Since Social Security income is adjusted to inflation through cost-of-living adjustments (COLA), Social Security recipients’ total annual income increases with inflation. However, because Social Security income tax brackets have remained static despite climbing inflation, more of Social Security recipients’ benefits are being taxed.
“Because the current taxable income thresholds are not adjusted for inflation over time, a growing number of beneficiaries pay the tax and on a growing portion of their benefits. The total increase in taxable income probably won’t become apparent until the 2023 tax season,” Mary Johnson, a Senior Citizens League analyst, said in an October report.
The additional income allocated to Social Security beneficiaries also has the potential to cut them from low-income programs such as food stamps, rental assistance and Medicare Extra Help, Johnson noted.
“Some individuals might lose access to certain low-income benefits altogether because the COLA boosts their income over the limit,” Johnson said.
The inflation rate in the U.S. reached 9.1% in June, marking the largest 12-month increase since the period ending November 1981. (RELATED: Inflation Hits Yet Another Record High As Americans Feel The Squeeze)
“Seniors, particularly those subsisting on fixed incomes and mainly relying on their Social Security check, are being ravaged by the highest inflation rate since rates have been recorded, and fellow senior, Joe Biden, is solely responsible through his out-of-control spending,” Jim Martin, founder and chairman of the 60 Plus Association, told the Daily Caller News Foundation.
Based on this new inflation data, COLA is projected to increase by 10.5% in 2023, according to estimates from the Senior Citizens League, raising the average retiree benefit by $175.10 every month, or an annual increase of over $2,000. If this projection is accurate, a 10.5% increase for Social Security recipients would mark the most significant annual adjustment since 1981, when beneficiaries experienced an 11.2% upsurge.
Since 1985, retirees have been taxed on their total income, including their Social Security earnings, if they receive more than $25,000 if they are single or $32,000 for married couples. Individuals who earn more than $34,000 and couples who earn more than $44,000 can be taxed on up to 85% of their benefits.
Cola for social security should be tax exempt!!!! Taking it right back if u tax the seniors enough is enough!!! Tax exempt cola raises are needed!
— Nanci (@notfancynanci) July 14, 2022
New estimates from the Congressional Budget Office expect the portion of Social Security benefits subject to tax to grow by 10% this year and another 10% in 2023, according to Fox Business.
Additionally, in 2022, the Social Security trust fund is predicted to receive an additional $10.6 billion in taxing benefits than it recorded in 2021, according to the program’s trustees.
The Social Security Administration did not immediately respond to the DCNF’s request for comment
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