Hey there, did you know that in 2025, we might see an increase in Social Security tax?
Starting mid-October, the maximum taxable earnings for Social Security is expected to change. The Social Security Board of Trustees is forecasting that the new maximum taxable income limit will be $174,900, up from $168,600.
What does this mean for workers? Well, employees could potentially see their Social Security contributions increase by up to $391. With a tax rate of 6.2%, anyone earning over $174,900 per year could have $10,844 deducted, compared to $10,453 this year.
While this increase may not sit well with some, it could benefit seniors. The Social Security Funds are expected to run out of money by the mid-2030s, potentially leading to a 20% cut in benefits for retirees.
There could be further proposals to raise or get rid of the Social Security maximum tax amount. By increasing the taxable amount, it could help sustain the program for a longer period.
Many legislators may oppose these changes, fearing the impact on high-income earners and other investments like businesses that provide jobs and benefits.
It’s vital to weigh the consequences on millions of Americans if severe cuts were made to Social Security to keep it afloat. Next year’s Social Security payments will be adjusted based on the cost of living, with updates coming in October when the consumer price index is released.
The Senior Citizen League has estimated a 2.7% increase in benefits for next year, potentially adding an extra $51 to the average monthly benefit of $1,967.