Ask Larry

Is Anything In The Works To Increase The Income Limits That Determine How Much Of A Person's Benefits Are Taxable?

Larry since 1984 the income limits before seniors are taxed up to 85% of their social security income hasn’t changed, how are to survive with having to use are savings to pay taxes! Is there anything in the works to increase these limits?

Hi. Just to clarify, up to 85% of the amount of Social Security benefits that a person receives can be subject to income taxes depending on the person's total income. The tax rate is not 85%, though. The highest current federal income tax rate is 37%, so the maximum amount of a person's Social Security benefits that could potentially be lost to federal income taxes is roughly 31.45% of their total benefits (i.e. 37% of 85% of their benefits).

The regulations governing the taxation of Social Security benefits were passed into law by Congress, and only Congress can change those regulations. Various bills have been proposed in Congress over the years to either eliminate the taxation of Social Security benefits or to raise the income limits, but none of them have received significant support. You may want to consider contacting your representatives in Congress to encourage them to introduce or support such legislation.

Best, Jerry

Sep 23 2022 - 12:46pm
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