Approximately 70 million Americans will benefit from the increase of 8.7 percent in 2023 under Social Security and Supplemental Security Income (SSI).
The Social Security Benefits in 2023
Retirees who only rely on Social Security benefits will now have an 8.7% cost-of-living adjustment. Two factors increase the size of Medicare Part B premiums and taxes on benefits in 2023. The standard monthly premium for Medicare Part B, which covers outpatient and medical coverage, is set to go down by 3% next year, to $164.90 from the current rate of $170.10. Because those premiums are typically deducted directly from benefit checks, a lower rate will make it possible for more beneficiaries to see the bump from the cost-of-living adjustment or COLA.
These adjustments have started this January of each year and are based on the increase in average wages. Based on that expanded amount of earnings is subject to the Social Security tax (taxable maximum) will increase to $160,200 from $147,000.
More information regarding Medicare changes for 2023 is available at www.medicare.gov. For Social Security beneficiaries receiving Medicare, their new boosted benefit in 2023 amount was available in December through the mailed COLA notice and my Social Security’s Message Center.
This Is How Social Security Benefits Are Taxed
Social Security benefits are taxed based on a formula commonly known as “combined” or “provisional” income. That is calculated by the adjusted gross income and adding nontaxable interest and half of your Social Security benefits.
Taxes on Social Security benefits apply to single taxpayers beginning with $25,000 in combined income and for married couples $32,000 in combined income. Those single taxpayers with $25,000 to $34,000 in combined income pay tax on up to 50% of their benefits. The same goes for married couples earning between $32,000 to $44,000.
According to the Center for Retirement Research at Boston College, the thresholds are not adjusted for wage growth or inflation, over time that has pushed more Social Security beneficiaries to pay taxes on their benefits.