Searing-hot inflation could push Social Security recipients into a higher tax bracket as a result of what's likely to be a record-high cost-of-living adjustment.
In this photo illustration, a Social Security card sits alongside checks from the U.S. Treasury on October 14, 2021 in Washington, DC.Should Social Security beneficiaries see a 10.5% increase in their monthly checks next year, it would mark the steepest annual adjustment since 1981, when recipients saw an 11.2% bump.
Some seniors may never have owed taxes on their benefits, but that's likely to change next year when they file their tax returns. In fact, the Congressional Budget Office has estimated the share of Social Security benefits subject to tax could grow by 10% this year and another 10% in 2023. In all, total income taxes paid on that money is projected to climb by 37% this year.
A man shops at a Safeway grocery store in Annapolis, Maryland, on May 16, 2022, as Americans brace for summer sticker shock as inflation continues to quicken.Higher monthly income can also reduce seniors' eligibility for low-income programs like SNAP, the Supplemental Nutrition Assistance Program , Johnson said.
The average benefit in 2022 jumped by 5.9%, which amounted to a monthly increase of $92 for the average retired American, bringing the full amount to $1,657, the Social Security Administration announced last year. Soaring inflation has already eroded the entirety of the increase, however, with recipients losing 40% of their buying power since 2000, according to calculations by the Senior Citizens League.
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