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No TAXES on Social Security – What does it mean for those Retired?
Social Security became effective on January 1, 1937, following the enactment of the Social Security Act in 1935. This legislation aimed to provide financial assistance to the elderly, disabled, and survivors of deceased workers.
The ongoing deliberations concerning the sustainability of the Social Security Trust Fund have prompted proposals to reform the system to ensure its long-term viability.
The existence of this discourse is unsurprising, as politicians have utilized the Social Security (SS) system, funded by the citizens, to increase benefits for other purposes, leveraging the SS trust fund to underwrite the new benefits.
Amendments enacted in 1939, 1950, 1965, 1983, and 1983 have introduced additional benefits, including the increase in the retirement age from 65 to 66 years of age and the implementation of the Cost of Living Adjustment (COLA). In addition, the government uses loans from the SS Trust to fund other projects.
These loans are held government securities that represent obligations of the federal government. (In other words, the taxpayer)
AT THE BEGINNING OF 2024, THE SS TRUST WAS OWED $2.79 TRILLION,
A few of the expenses from the loans were for defaulted student loans and student loan forgiveness. The SS Trust is funded in part by payroll taxes.
The taxation of Social Security benefits for retirees is determined by their combined income, which includes adjusted gross income (AGI), nontaxable interest, and half of the Social Security benefits received. Here’s a detailed breakdown of how this works:
TAXABLE PORTION OF YOUR SOCIAL SECURITY BENEFITS
**Income Thresholds**:
- **Single Filers**:
- No tax if combined income is below $25,000.
- Up to 50% taxable if combined income is between $25,000 and $34,000.
- Up to 85% taxable if combined income exceeds $34,000.
- **Married Couples Filing Jointly**:
- No tax if combined income is below $32,000.
- Up to 50% taxable if combined income is between $32,000 and $44,000.
- Up to 85% taxable if combined income exceeds $44,000.
These taxes have never been indexed or increased since inception so it becomes inflationary for the taxpayer.
State Taxes
While many states do not tax Social Security benefits, some do. For example, New Mexico has specific thresholds that might exempt many retirees from state taxes on these benefits. Arizona does not tax SS benefits. Minnesota has up to 9.85% tax on benefits.
Conclusion
The elimination of SS taxes on taxpayers will increase their net disposable income. There will be a fight to prevent this from being passed by legislators as the old guard likes to use the Trust as a slush fund.
Social Security became effective on January 1, 1937, following the enactment of the Social Security Act in 1935. This legislation aimed to provide financial assistance to the elderly, disabled, and survivors of deceased workers.
The ongoing deliberations concerning the sustainability of the Social Security Trust Fund have prompted proposals to reform the system to ensure its long-term viability.
The existence of this discourse is unsurprising, as politicians have utilized the Social Security (SS) system, funded by the citizens, to increase benefits for other purposes, leveraging the SS trust fund to underwrite the new benefits.
Amendments enacted in 1939, 1950, 1965, 1983, and 1983 have introduced additional benefits, including the increase in the retirement age from 65 to 66 years of age and the implementation of the Cost of Living Adjustment (COLA). In addition, the government uses loans from the SS Trust to fund other projects.
These loans are held government securities that represent obligations of the federal government. (In other words, the taxpayer)
AT THE BEGINNING OF 2024, THE SS TRUST WAS OWED $2.79 TRILLION,
A few of the expenses from the loans were for defaulted student loans and student loan forgiveness. The SS Trust is funded in part by payroll taxes.
The taxation of Social Security benefits for retirees is determined by their combined income, which includes adjusted gross income (AGI), nontaxable interest, and half of the Social Security benefits received. Here’s a detailed breakdown of how this works:
TAXABLE PORTION OF YOUR SOCIAL SECURITY BENEFITS
**Income Thresholds**:
- **Single Filers**:
- No tax if combined income is below $25,000.
- Up to 50% taxable if combined income is between $25,000 and $34,000.
- Up to 85% taxable if combined income exceeds $34,000.
- **Married Couples Filing Jointly**:
- No tax if combined income is below $32,000.
- Up to 50% taxable if combined income is between $32,000 and $44,000.
- Up to 85% taxable if combined income exceeds $44,000.
These taxes have never been indexed or increased since inception so it becomes inflationary for the taxpayer.
State Taxes
While many states do not tax Social Security benefits, some do. For example, New Mexico has specific thresholds that might exempt many retirees from state taxes on these benefits. Arizona does not tax SS benefits. Minnesota has up to 9.85% tax on benefits.
Conclusion
The elimination of SS taxes on taxpayers will increase their net disposable income. There will be a fight to prevent this from being passed by legislators as the old guard likes to use the Trust as a slush fund.
Edited 22 d ago
Posted 22 d ago
Responses: 4
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What they need to do is get all these welfare cases off SSDI That's not what it was meant for!
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SPC Jeff Daley, PhD
The short answer is no. Social Security Disability Insurance (SSDI) was added to the Social Security program as part of the Social Security Amendments of 1956. This amendment established SSDI to provide benefits to individuals who are unable to work due to a disability. When applying for SSDI, the Social Security Administration (SSA) reviews the applicant's work history to confirm that they have contributed sufficiently to the Social Security system. This work history is crucial in determining eligibility for benefits.
According to the Social Security Administration (SSA), if a person is receiving SSDI and reaches their full retirement age, their SSDI benefits automatically convert to retirement benefits, but the amount remains the same.
The majority of Social Security payments necessitate contributions to the Trust Fund. However, Supplemental Security Income (SSI) and specific family benefits permit individuals to receive aid without having personally contributed to the system. This presents a substantial fiscal burden, financed by those who believe they are accumulating their retirement funds. In place of being able to access those contributions at retirement they are being informed, "Regrettably, we are depleting our resources, rendering all the monies you remitted to the Social Security Trust Fund valueless."
Call it equity sharing or welfare it comes from others taking from your earned savings account that some would have as their only source of income at retirement.
SGT James Murphy SGT Ruben Lozada MAJ Ken Landgren
According to the Social Security Administration (SSA), if a person is receiving SSDI and reaches their full retirement age, their SSDI benefits automatically convert to retirement benefits, but the amount remains the same.
The majority of Social Security payments necessitate contributions to the Trust Fund. However, Supplemental Security Income (SSI) and specific family benefits permit individuals to receive aid without having personally contributed to the system. This presents a substantial fiscal burden, financed by those who believe they are accumulating their retirement funds. In place of being able to access those contributions at retirement they are being informed, "Regrettably, we are depleting our resources, rendering all the monies you remitted to the Social Security Trust Fund valueless."
Call it equity sharing or welfare it comes from others taking from your earned savings account that some would have as their only source of income at retirement.
SGT James Murphy SGT Ruben Lozada MAJ Ken Landgren
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