(Washington, DC) The new tax law appears to have had little to no effect on relieving the taxation of the Social Security benefits received by retired taxpayers, according to early results of a new survey by The Senior Citizens League (TSCL). “Almost half of all retiree households, about 46% of survey respondents, report that they paid taxes on a portion of their Social Security benefits for the 2018 tax year that just ended,” says Mary Johnson, a Medicare and Social Security policy analyst for The Senior Citizens League. “According to our data, since 2015 the average number dropped just 1 percent from 51 percent to 50 percent of retiree households who report paying taxes on their Social Security benefits,” Johnson notes.
The results didn’t come as a total surprise. While 2018 was the first full tax year affected, the 2017 Tax Cuts and Jobs Act, made no changes to the taxation of Social Security benefits. “Even retirees with very modest incomes can be subject to a tax on a portion of their Social Security benefits,” says Johnson. A growing number of retirees are affected by the taxation of Social Security benefits, because the income thresholds are fixed, and not adjusted annually, like income tax brackets. In 1984 when the taxation of Social Security benefits began, less than 10 percent of Social Security recipients paid tax on benefits. Now it’s about five times more. The Senior Citizens League is working to enact legislation that would raise the income thresholds that subject Social Security benefits to taxation.
From 50 percent to 85 percent of the Social Security benefits can be subject to taxation, depending on income. Single filers with incomes of $25,000 or more, and joint filers with incomes of $32,000 or more are affected. The tax is determined by adding nontaxable interest income to the adjusted gross income, and one half of Social Security benefits.
A new Social Security bill in Congress, the Social Security 2100 Act (H.R 860) (S. 269), would eliminate the tax for millions of older taxpayers, by making substantial changes to the income thresholds. The bill would raise the current income thresholds for taxation of Social Security benefits to $50,000 for single filers and $100,000 for joint filers, effective for tax year 2020. Lifting the income thresholds that subject Social Security benefits to taxation is strongly supported by older taxpayers. The bill would make up for the loss of revenue, by other payroll tax changes.
With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.