2022 Social Security Trustees Report

[pb4uski]

True, it causes the tax benefit provided to lower income people that I mentioned to get watered down over time due to inflation... I'm not sure if that is necessarily bad. I think that provision was a political gift to transition from not taxing benefits at all like they used to to taxing benefits similar to contributory pension plans, non-deductible IRAs and the like.

 

[corn18]

And fewer and fewer people are eligible for the 100% exclusion because the exclusion amount is not indexed to inflation.

The farthest back I could find pub 915 is 1994 and the base amount was $32,000 for MFJ then, same as today. In 1994 dollars, that is only $17,431. Or to look at it another way, it should be $58,748 if it were indexed to inflation. So, everyone making more than $32,000 and less than $58,748 today is now being taxed when they should not be. That is regressive and hurts low income folks a lot.

I found that SS started being taxed in 1984 and the base amount has not changed since then. So, the base amount for MFJ should be $84,533 not $32,000 for MFJ and $66,057 for single.

 

[pb4uski]

I think that was intentional though. They really wanted to just make all SS income 85% taxable, but to get the changes they had to compromise and make is less taxable for lower income taxpayers... but by not indexing the hurdle to inflation they know that the tax break will get weaker over time.

 

[corn18]

I think that was intentional though. They really wanted to just make all SS income 85% taxable, but to get the changes they had to compromise and make is less taxable for lower income taxpayers... but by not indexing the hurdle to inflation they know that the tax break will get weaker over time.

I guarantee it was intentional. It's the same as raising taxes every year. Not unlike federal income taxes before they were inflation indexed in 1985.