Each year, news about Social Security’s cost-of-living adjustment (COLA) can be both exciting and nerve-wracking. The biggest COLA increase in 41 years was recently announced for 2023: a 8.7 percent bump in benefits—the largest since 1982! This increase is designed to fight inflation, and after a year where high inflation affected every aspect of the economy, it’s clear why an increase like this was desperately needed.
However, The Motley Fool reports that there may be an unpleasant surprise for many seniors who receive Social Security benefits. This is because the COLA increase could cause a bump in taxes for those who also receive additional income.
Those who make more than $25,000 as a single person can have up to half of their Social Security benefits taxed, and those who make more than $34,000 per year can have up to 85 percent of their benefits taxed.
So, while 2023’s COLA increase is a welcome relief, those who may be pushed into the taxation bracket could find themselves in a compromising position.
The Seniors Center is calling for change to Social Security. If Congress doesn’t take action, retirees could experience more than just taxation on their benefits—they could see cuts to their benefits as well. Be sure to follow us on Twitter and Facebook for more updates!