Increased Social Security Benefits May Lead to Higher Taxes for Some Recipients
The significant increase in Social Security benefits in 2023, the largest since 1981, could result in a higher tax bill for some recipients this tax season, particularly in states that tax these benefits.
- Social Security benefits saw a significant increase in 2023, the largest since 1981, to offset the rising cost of living. This increase may result in a higher tax bill for some recipients this tax season.
- The taxation of Social Security benefits depends on the recipient's filing status and other income. If the combined income exceeds the base amount for the filing status, some benefits may be taxable.
- The base amounts for tax purposes have not been adjusted for inflation, meaning that the increase in Social Security benefits could push some recipients over the base amount, resulting in taxable benefits.
- Strategies to potentially reduce taxes on Social Security benefits include managing retirement account withdrawals, relying on Roth accounts, and deferring Social Security benefits.
- Only about a dozen states tax Social Security benefits, with each state having different rules on what or how they will tax these benefits. Age and income usually determine if you pay.
Forbes 
