If you are earning more than $400,000 per year, you may have to pay more money in taxes. This is because of the Social Security Act of 2023. This proposal aims to get more cash from not even 2 percent of earners.
By doing so, the Social Security Administration (SSA) will deal with the financial difficulties it is facing. Bear in mind that the latest report by the Board of Trustees revealed that the Administration will not have enough money to pay 100% of benefits in 2034.
In about ten years, seniors may have to face a reduction in their Social Security payments. It could be about 20 or even 25 percent less. So, if you are on a tight budget this could be terrible for your financial situation.
What is the aim of the Social Security 2100 Act of 2023?
The main aim of this Act is to ensure the financial stability of the Social Security program. This Act was introduced by Democratic Representative John Larson. It was last July when he presented it.
Undoubtedly, this could make a real difference and would be vital for the continuity of retirement payments in the United States. It was 52 years ago when the last improvement to Social Security recipients took place.
The current taxable maximum is $160,200. This means that if you have earnings of more than $160,200, you will not have to pay taxes once you exceed that amount. So, you will pay taxes for just $160,200.
However, thanks to the 2024 COLA there will be a higher amount. This will mean Social Security will receive more money and some high earners will have to pay more money. The new taxable maximum will be $168,600 in 2024.
What could the $400,000 threshold be like?
This approach would make taxpayers pay up to $9,932.40 if they earn up to the taxable maximum, which is $160,200 in 2023. So far, it is the same. Those with earnings between $160,200 and $400,000 would be then untaxed.
#DYK if you’re receiving #SocialSecurity retirement benefits, the IRS offers free help with filing your taxes through the Volunteer Income Tax Assistance Program and Tax Counseling for the Elderly. Visit https://t.co/aS31WzBoRo for details and find a site near you. pic.twitter.com/lXdAT1hDBn
— Social Security (@SocialSecurity) October 12, 2023
But those high earners who have incomes over $400,000 would have to pay taxes again. Now, workers have to pay Social Security 6.2% in taxes. So, that 6.2% for earnings over $400 would definitely come in handy for the funding of SSA.
Therefore, those taxpayers whose earnings range between $400,000 and $1,000,000 may have to pay up to $47,132.40 per year. The thing is this is just a proposal.
Since it has not been voted yet, taxpayers with higher earnings have nothing to fear yet. This could harm the financial situation of those high earners who have debt and live on a tight budget. So, be careful and start improving your savings. Social Security may soon bring changes.