TAX NEWS - JUNE 2010

CRS issues report on taxation of Social Security benefits

The Congressional Research Service (CRS) has updated its report, Social Security: Calculation and History of Taxing Benefits, explaining how Social Security benefits are taxed to reflect the 2009 Social Security Trustees' report.

Individuals with a provisional income of less than $25,000 and married couples with a provisional income of less than $32,000 are not subject to the tax. In 2008, trust fund income from the taxation of benefits amounted to 2.1%. According to the Congressional Budget Office, as cited by the CRS, approximately 39% of all Social Security beneficiaries were affected by income taxation of benefits in 2005. This is an increase over the 32% that were affected as reported for 2000. Because the thresholds are not indexed for inflation or wage growth, this percentage is expected to increase.

In the 111th Congress, six measures have been introduced that would impact the taxation of benefits. These bills are outlined in the 2009 report.