At what age is Social Security no longer taxed in the US? – Community News
Social Security

At what age is Social Security no longer taxed in the US?

Before 1984, Social security benefits were not taxed. However, in order to keep the trust fund, which supports the program, solvent, bipartisan legislation was passed to tax some of the payments made to seniors, surviving spouses and the disabled. if they had an income above certain thresholds.

At the beginning, less than one in ten beneficiaries paid income tax on their distributions. But that percentage has increased over time, as the thresholds, unlike benefits, were not indexed to inflation and in the intervening four decades no inflation adjustments is made. This meant that as benefits rose, more recipients crossed the threshold. Now 56 percent of beneficiaries pay income tax on a portion of their distribution, sometimes as much as 85% if their total income exceeds the upper limit.

However, once you get to full retirement age (between 65 and 67 years, depending on your year of birth) you are no longer taxed on Social Security benefits. The amount of your annual Social Security benefit continues to grow until you reach age 70, so you may consider deferring your claim for a few years if you plan to continue working after normal retirement age.

How are Social Security benefits taxed?

The tax rate for Social Security benefits varies based on a number of factors beyond age alone; and the household income of recipients is the main determinant of taxation. Those thresholds also depend on the filing status of Social Security recipients.

Persons with a total gross income, including social security, of over $25,000 are taxed on a maximum of 50% of their social security income. Couples filing jointly are taxed when their total income exceeds $32,000.

Earning individuals over $34,000, or couples with a joint gross income of at least $44,000, are taxed on up to 85% of their Social Security benefits.

Usually it’s alone retirees, who, apart from their social security rights, have very little family income, which can be exempt from tax on the payments.

How is the Social Security tax rate calculated?

The tax rate levied on Social Security benefits is similar to that of other forms of income. Filers must submit their adjusted gross income, which combines their salary, Social Security benefits, and all other sources of taxable income.

If that total exceeds the minimum threshold, then at least 50% of your Social Security benefits is considered taxable income and will be treated as such. The portion of your total Social Security entitlement that is based on various factors, as noted above.