Social Security Tax Thresholds Unchanged Since 1984 Era

Author: The Senior Citizens League
Published: 2019/02/20 - Updated: 2026/01/20
Publication Type: Informative
Category Topic: Taxation - Related Publications

Page Content: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This information comes from The Senior Citizens League, a nonpartisan seniors advocacy organization that conducts policy analysis on Social Security and Medicare issues. The report explains how unchanged income thresholds from 1984 now subject more than half of all retired households to federal taxation on their Social Security benefits, a dramatic increase from the original 8 percent when the tax was implemented. Single filers face taxation at just $25,000 in annual income, while joint filers hit the threshold at $32,000 - figures that would be $61,933 and $78,895 respectively if adjusted for inflation. This analysis proves particularly valuable for retirees, people with disabilities receiving Social Security Disability Insurance, and those planning their retirement finances, as it clearly demonstrates how stagnant tax policy creates growing financial burdens on Americans living on fixed incomes - Disabled World (DW).

Introduction

Even retirees of modest means could pay tax on Social Security Income says The Senior Citizens League.

While the 2017 "Tax Cut and Jobs Act" is expected to lower taxes for many taxpayers, it doesn't address a feature of the tax law that takes a cut of Social Security income from a growing number of older taxpayers, warns The Senior Citizens League.

Main Content

The income thresholds that subject Social Security benefits to taxation remain unchanged under the new law.

"Even the Social Security benefits of retirees with the most modest of incomes - an Adjusted Gross Income only two times higher than the federal poverty level - could be subject to taxation," says Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League.

Social Security benefits were not subject to taxation when the program first became law, but since 1984, beneficiaries with income exceeding a certain threshold have paid taxes on a portion of their Social Security income.

In 1984 only 8 percent of retirees - those with the highest-income - paid tax on their Social Security benefits. In 2019 however, more than half of all retired households - about 51 percent on average - report paying the tax according to surveys by The Senior Citizens League.

The Reason This is Occurring is Due to Fixed Income Thresholds

Unlike tax brackets that are adjusted annually for inflation, the income thresholds that subject Social Security benefits to taxation have never been adjusted for inflation.

Single filers with income between $25,000, and $34,000, pay tax on up to 50 percent of their annual Social Security benefits.
For single filers with income over $34,000, up to 85 percent of Social Security income may be taxable.
Joint filers with income between $32,000 and $44,000 pay tax on up to 50 percent of Social Security benefits.
Up to 85 percent of Social Security benefits are taxable on income over $44,000 of joint filers.

To determine whether income is taxable, nontaxable interest (if any), plus one - half of Social Security benefits, is added to the adjusted gross income.

"Had these income levels been adjusted for inflation since 1984, the $25,000 threshold for single filers would be $61,933 today, and the $32,000 level for joint filers would be $78,895," says Johnson.

"When this tax was originally passed into law, lawmakers sold it to the public as a tax mostly affecting wealthy Social Security recipients," says Johnson. "But in reality, it now affects retirees with very modest incomes," Johnson notes.

Revenues

The revenues raised from the taxation of Social Security benefits go to the Social Security and Medicare Trust Funds.
Revenues from the 50 percent taxation level go to the Social Security Trust Fund, and revenues from the 85 percent taxation level go to the Medicare Hospital Insurance Trust Fund.
The Senior Citizens League supports legislation that would adjust the income thresholds to better protect retired taxpayers with lower incomes.
The Social Security 2100 Act would replace the current thresholds with a single set of thresholds at $50,000 single filers and $100,000 for joint filers.

Insights, Analysis, and Developments

Editorial Note: What began as a tax targeting wealthy beneficiaries has quietly transformed into a burden shouldering middle and lower-income retirees - a textbook example of how failing to index policy to inflation fundamentally reshapes who pays and who benefits. The fact that income thresholds haven't budged in four decades while the cost of housing, healthcare, and basic necessities has skyrocketed means that today's modest-income retiree faces tax consequences their 1984 counterpart would have avoided entirely. Whether Congress addresses this disparity through proposed legislation like the Social Security 2100 Act remains to be seen, but the trend is clear: without intervention, an ever-growing portion of Americans will find their retirement security diminished by a tax originally designed for the affluent few - Disabled World (DW).

Attribution/Source(s): This quality-reviewed publication was selected for publishing by the editors of Disabled World (DW) due to its relevance to the disability community. Originally authored by The Senior Citizens League and published on 2019/02/20, this content may have been edited for style, clarity, or brevity.