@Texconsin
Since AARP advocates supporting proposals to strengthen Social Security and a lot of the income to the Trust Funds are currently coming from these beneficiary taxes on their SS benefits - I doubt this is the proper time to be talking about reducing revenues into the Trust Funds by lifting or indexing the income limits.
Social Security Trust Fund Data 1957 to present
However, at the state level, I believe they have been successful over the years in convincing many states to stop taxing these benefits.
There are some House proposals to "fix" Social Security that contain provisions to raise the income limits to which these benefit taxes would apply. But don't hold your breath cause again this would reduce revenues to the program and would have to be made up somewhere else.
Under current law, single tax filers with combined “income” (approximately equal to adjusted
gross income plus non-taxable interest income and one-half of their Social Security benefit)
greater than $25,000 may have to pay income tax on up to 50 percent of their Social Security
benefits. If combined “income” exceeds $34,000, up to 85 percent of benefits may be taxable.
Currently this income tax revenue on SS benefits is disbursed as follows:
- For taxing up to 50 percent of Social Security benefits is credited to the
OASI and DI Trust Funds. - The additional income tax revenue derived from taxing benefits in
excess of 50 percent, up to 85 percent, is credited to the HI Trust Fund.
The process is similar for joint tax filers, with $32,000 and $44,000 thresholds applying for possible taxation of up to 50 percent or 85 percent of the Social Security benefits, respectively.
The following changes have been suggested in the following bill (pdf version of the SS Actuary report on the bill)
Social Security 2100: A Sacred Trust” Act, introduced on October 26, 2021 by Chairman John Larson
Section 104. Replace the current-law thresholds for federal income taxation of OASDI
benefits with a single set of thresholds at $35,000 for single filers and $50,000 for joint filers
for taxation of up to 85 percent of OASDI benefits, effective for tax years 2022 through 2026.
Revert to current-law specifications for tax years 2027 and later.
Under the proposal, both sets of the current-law thresholds would be replaced with a single set of
thresholds, $35,000 and $50,000 for single and joint filers, respectively, for taxing up to 85 percent of OASDI benefits, effective for tax years 2022 through 2026. For tax years 2022
through 2026, the amount of revenue from taxation of OASDI benefits that would be allocated to
the HI Trust Fund would be at the same level as if the current-law computation (in the absence of
this provision) were applied. The net amount of revenue from taxing OASDI benefits, after the
allocation to HI, would be allocated to the combined OASI and DI Trust Funds. All
specifications for taxing Social Security benefits would revert to current law for tax years 2027 and later.
Again, I would not hold my breath - these income limits for taxes on benefits have been in place for a VERY LONG TIME. We have all kinds of ways that we can plan for retirement and thus we can also plan for these taxes and help out the program.
It's Always Something . . . . Roseanna Roseannadanna