Millions of Americans Braced For Higher Social Security Tax Hike

( A tax increase is set to take place for Americans making over $174,900 per year to collect more social security funding. The social security tax rate is 6.2% and the taxable maximum is currently $168,600. This increase is set to collect an additional $391 from the millions of Americans that reach that annual financial threshold.

Many seniors and individuals have a belief that social security payments do not get a cost of living increase to counter the effects of inflation. However, there is an increase each year that is tied to the consumer price index and how much it changes in the third quarter of the previous year. It is estimated that the social security payment increase for 2025 will be 2.7%. That would make the average monthly stipend for those collecting social security increase by about $51 to reach a total of $1,967.

Individuals that start collecting social security checks below the full retirement age may have funds withheld if they make over $22,320 in the calendar year. For every $2 earned over that minimum, citizens will have $1 in social security funds withheld. Most citizens are able to recoup those withheld funds later.

The future of social security has been an issue of concern for Americans who aren’t yet ready to retire. A recent poll found that 88% of retired Americans rely on social security funds and 60% consider social security to be a major source of income.

According to a trustees report released in May, the social security program is going to diminish payments when the year 2035 hits. Retirees would receive 83% of their full expected benefits. The only way to resolve this shortage in social security funding is to increase taxes or reduce the current benefits. That requires action by congress and it is unknown if that action will be taken in time to provide the full benefits to future retirees.

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