Social Security faces a major funding shortfall that could lead to benefit cuts. According to the author, unless Congress acts, benefits will be cut to 78% of promised levels when the trust fund is depleted. Federal tax thresholds on benefits do not rise with inflation, and two senators propose removing the wage cap.
Social Security faces a major funding shortfall that could result in benefit cuts in the coming years. Unless Congress acts, benefits will be cut to 78% of promised levels when the trust fund is depleted, according to the author.
For single tax filers with provisional income reaching $25,000, up to 50% of Social Security benefits may be subject to federal income tax. For married couples filing jointly, the comparable figure is $32,000. Single filers with provisional income over $34,000, and joint filers over $44,000, could face taxes on up to 85% of their benefits.
As described from IRS Publication 915, benefits begin to become taxable when half the benefit plus other income passes $25,000 for a single filer, or $32,000 for joint filers. Neither threshold rises with inflation.
Sens. Bernie Moreno (R-Ohio) and Elizabeth Warren (D-Massachusetts) propose eliminating the cap on wages subject to the Social Security tax. That cap is currently $184,500.
