Social Security benefits will get a big cost-of-living adjustment next year, but that good news may also have negative consequences for retired workers.
Inflation rocketed to a four-decade high this year, so Social Security benefits will get an unusually large 8.7% COLA (cost-of-living adjustment) in 2023. That ranks as the largest raise for retired workers since 1982 and the fourth-largest raise in history. While that certainly qualifies as good news, the historic COLA may come with two unpleasant surprises.
More retired workers will owe federal income tax on Social Security benefits
Initially, Social Security benefits were exempt from federal income tax. But Congress changed the law in 1983, authorizing the taxation of benefits for individuals whose income exceeded certain thresholds. A second (higher) threshold was added in 1993.
Oddly, those thresholds have never been adjusted for inflation. That is problematic because benefits have been adjusted for inflation. In other words, each COLA applied to benefits since 1983 has pushed more beneficiaries over the income thresholds. In fact, less than 10% of beneficiaries owed taxes on Social Security income when the law went into effect, but that figure is around 50% today, and a big COLA in 2023 will add momentum to the problem.
In most cases, beneficiaries who derive all of their income from Social Security will not pay taxes on benefits. But those with additional sources of income — such as a job, 401k distributions, or traditional IRA distributions — may find themselves on the wrong side of the income thresholds next year.
total bs! unless you retired early! if you waited to retire until full retirement age then this has no impact on you.
Most Retire EARLY who are Smart !!!! age 62
You may not live to see 66 !!! Govt knows it
Biden just Took BACK the RAISE in the 2 TRILLION Bill passed last Week !!!!!!!!
It should have NO TAX period !!! MAKE IT THAT WAY !!!! Govt Blows Billions & Trillions other Places !!!!!$$$$$$
To Illegals / Other countries / Reparations / Green !!!!!! Never to Americans
There has NEVER been a Large Raise to Social Security > What Planet are you on ????????
This is NO RAISE just bullshhht & a REDUCTION in pay !!!! Soc Sec should be TRIPLED by now !!!!!!
Plus > it is NOT the Govt’s Money !!! It is OUR fkkking $$$$$$$$$ MONEY !!!!! So Don’t dare
dip into it for Illegals & other Govt Give-aways !!!!
Make Govt Pay it Back for the Money it STOLE since LBJ in the 60’s Plus Interest !!!!!!
Thanks to Pedo-Slow-Joe for the Social Security Tax – and the increase on that tax ten years later!
Social Security wasn’t taxed until Joe Biden made it happen, This needs to be a campaign issue and get it reversed
Social security payments have been taxed for years.
And NEWS FLASH > Did you know the Govt since the 60’s with LBJ has been allowed to
STEAL money from Social Security ( OUR MONEY ) & use it as they Please !!! Millions $$$$
Time to make them PUT it the Hell BACK Plus Interest !!!!!!!!!!!!!
and NONE should go to ILLEGALS or Anyone but the Familys who Paid the $$$ in !!!!!!!
When you Die the leftover Money should go to your Kids !!! Your $$$ NOT Govt’s !
Why do I never hear anything about cuts to welfare and make them pay taxes on their free goodies.