Social Security Benefit Taxation Highlights (CRS Report for Congress)
| Release Date |
Revised Sept. 23, 2024 |
| Report Number |
IF11397 |
| Report Type |
In Focus |
| Authors |
Paul S. Davies |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
• In August 2024, the Social Security system provided over
$121.4 billion in monthly benefits to almost 68.1 million
retired or disabled workers and their spouses, survivors,
and dependents.
• Since 1984, beneficiaries with income above certain
statutory thresholds are subject to federal income
taxation on up to 50% of their Social Security benefits.
Since 1993, beneficiaries with income above a higher set
of statutory thresholds are subject to federal income
taxation on up to 85% of their Social Security benefits.
• The proportion of beneficiaries who owe income tax on
their Social Security benefits is rising.
• The overall share of Social Security benefits paid as
federal income taxes rose from 2.2% in 1994 to 6.6% in
2022.
• In 2023, the Social Security trust funds were credited
with $50.7 billion from the taxation of Social Security
benefits, or 3.8% of the trust funds’ total income. Also in
2023, income to the Medicare Hospital Insurance trust
fund from the taxation of Social Security benefits was
$35.0 billion, or 8.4% of the trust fund’s total income.
Taxation of Social Security benefits began with the Social
Security Amendments of 1983. There were two primary
reasons for taxing Social Security benefits. The first was to
improve tax equity by treating Social Security benefits
more like other forms of retirement income and other
income designed to replace lost wages. The second was to
provide revenue to strengthen the financial solvency of the
Social Security trust funds.
