"Since 1983, the earnings threshold for income tax levies on Social Security benefits has been $35,700. According to the CPI Inflation Calculator, $35,700 in 1983 dollars is equivalent to $12,000 worth of buying power in 2025, thanks to inflation. The current rate is a low threshold for taxation and disproportionately unfair to low income and disabled Americans, although OBBB gives a majority of them some temporary relief, while calling for Congress to follow President Trump's call for zero Social Security income taxes."
"Until President Donald Trump's tax cuts and pro-business strategies re-energized American entrepreneurship in 2017 and again in 2025, history had to look back to the era of President Ronald Reagan for its most recent historical precedent. However, one of the sore spots that both Presidents Reagan and Trump have been unable to cut was the profligacy of Congress and its tax-hungry thirst for US citizens' hard-earned money."
From 1937 to 1983, taxation on Social Security benefits increased from 1.0% on the first $3,000 of earnings to 6.7% on $32,400 in 1982 and $35,700 in 1983. The statutory threshold of $35,700 has not been adjusted since 1983. Adjusted by CPI, $35,700 in 1983 equals about $114,776 in 2025, while $35,700 in 2025 has buying power equivalent to about $12,000 today. The tax rate on the first $35,700 rose to 12.4% as of 2025. The low, unadjusted threshold disproportionately harms low-income and disabled beneficiaries and prompts calls for elimination or reform of Social Security income taxation.
#social-security-taxation #inflation-and-purchasing-power #retirement-income-policy #disability-benefits
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