Social security benefits are designed to help pay for a retirees life. Sometimes people still need to pay taxes on them because the payments are considered income.
The magic age for retiring to not have to pay taxes on your benefits is your full retirement age, 66 or 67. The age of full retirement depends on your year of birth.
Before 1984 the payments weren’t taxed at all. Laws were later passed to help boost the Trust Fund responsible for supplying the money. In the beginning only one out of every ten recipients were paying taxes on their social security.
Now, 56% of recipients pay taxes. This is because when the law passed, they did not take inflation into account. As inflation rises, which causes benefits to rise, people are thrusted into a higher tax bracket despite them only receiving more to keep up with the times.
Taxes are decided on by a number of factors including age, recipients in a household, and the filing status of those recipients.
People making over $25,000 have half their income taxed. The same is true for couples grossing $32,000.
If individuals make over $34,000 or couples make over $44,000, they pay taxes on 85% of their income.
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