U.S. Social Security Tax Hikes Impacting Retirees' Payments as Economy Shifts
Significant Decreases in Social Security Checks Starting This Month
Beginning this month, many U.S. retirees in states like Colorado and Vermont will notice a decrease in their Social Security checks. A new tax hike in Connecticut, Montana, Minnesota, New Mexico, Rhode Island, Utah, and West Virginia could reduce monthly benefits by up to $200.
Economic Impact on Retirees
The remaining 41 states have not implemented income taxes on Social Security benefits, leaving a significant portion of recipients vulnerable. Close to 40% of Social Security recipients currently pay state or federal taxes on their benefits due to substantial combined earnings.
Monthly Payments and Average Payouts
- The Social Security Administration estimates that the average payout for retirees under 62 is $2,710.
- For those delaying benefits until 70, the average monthly payment spikes to an impressive $4,873.
- Factors influencing payouts include income level, age of retirement, and state tax policies.
Concerns Over Living Costs and Inflation
As inflation rises, new taxes are likely to burden retirees who depend on Social Security for everyday expenses. According to a recent study, many retirees are apprehensive about rising living costs exacerbated by the unpredictable market conditions.
Projected COLA Adjustments
The Cost-of-Living Adjustment (COLA) is projected to rise minimally in 2025 due to cooling inflation. It may only reach 2.5%, marking the lowest increase in years as the Federal Reserve adjusts its rates.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.