Hello and welcome back to Shoeba Español TV We hope you're having a wonderful day so far Today we have some crucial updates regarding Social Security that could significantly impact millions of Americans, especially retirees who rely on these payments as a vital source of income One of former President Donald Trump's long-standing campaign promises is now gaining momentum: a proposed increase in Social Security benefits and the possibility of lowering taxes on these payments We'll be breaking down all the details, including the new bill introduced in the Senate and what this means for Social Security recipients So if you or someone you know relies on Social Security benefits, stay tuned for all the essential updates
But before we dive into the topic, don't forget to like this video, subscribe to Shoeba Español TV, and turn on the notification bell so you never miss important news about Social Security and other financial updates.
An important campaign promise on the table
As many of you may recall, Donald Trump, during his campaign against Kamala Harris, made numerous promises about Social Security. One of the key promises was to increase benefits, improve the efficiency of the program, and guarantee that there would be no cuts. So far, there have been no cuts, but we haven't seen any substantial improvements either. However, one of these promises could finally come true.
According to a recent report by Newsweek, U.S. Senators Roger Marshall and Marsha Blackburn have introduced a new bill that proposes significant changes to Social Security taxes. This measure aims to provide financial relief to millions of retirees by reducing or even eliminating taxes on their Social Security benefits.
Why this is important for retirees
The Social Security Administration (SSA) estimates that the average monthly retirement benefit for January 2025 will be $1,976 For many retirees, this payment is their main source of income However, a large portion of Social Security beneficiaries have their benefits taxed, which affects their financial stability, especially with rising inflation and health care costs
Imagine trying to cover rent, groceries, medical expenses and other essential costs on just $1,976 per month. Now add federal and possibly state taxes to that. The amount left over for retirees becomes even smaller, making it a challenge to make ends meet.
This new bill aims to address this issue by eliminating the “double taxation” of Social Security benefits. But what exactly does double taxation mean? Let’s break it down.
Understanding double taxation
When you work and earn an income, a portion of your pay is taxable and allocated to the Social Security Trust Fund. If you are a W2 employee, 62% of your pay goes to Social Security and your employer contributes another 62%. Therefore, a total of 124% is contributed to the Trust Fund.
If you are self-employed, such as a freelancer or Uber driver, you are responsible for the full 124% contribution.
You might think that once you retire and start collecting Social Security benefits, that money would be tax-free since you already paid taxes on it during your working years. Unfortunately, that's not the case. The federal government currently taxes up to 85% of Social Security benefits if you earn above certain thresholds.
The proposed changes in the bill
The bill introduced by Senators Marshall and Blackburn aims to:
1 Increase income thresholds for taxation:
The provisional income threshold would increase to $34,000 for single taxpayers and $68,000 for married couples filing jointly. This is a significant increase from the current thresholds of $25,000 for individuals and $32,000 for married couples.
2 Inflation adjustment:
The thresholds would be adjusted annually to keep up with inflation, avoiding bracket increases that force more retirees to pay taxes as their benefits increase.
3 Simplified tax rules:
The bill proposes a single 85% inclusion rate for benefits exceeding the new thresholds. This would simplify the tax filing process and reduce confusion for seniors.
4 Redirection of funds:
To offset the potential loss of revenue, the bill suggests redirecting funds from inefficient government spending to discretionary accounts unrelated to defense, veterans, and national security.
Historical context of social security taxation
Social Security was initially designed as a tax-free benefit when it was introduced in 1935. However, changes in the 1980s and 1990s introduced taxes on up to 85% of benefits for higher-income retirees.
A 2021 analysis by the Congressional Budget Office found that about 50% of Social Security beneficiaries paid income taxes on their benefits. The Social Security Administration also projected that by 2050, more than 56% of beneficiary families would be subject to income taxes on their Social Security payments.
Potential financial relief for retirees
If this bill passes, millions of retirees could see immediate financial relief Even if the federal government doesn't eliminate taxes entirely, raising income thresholds would allow more retirees to keep a larger portion of their benefits This would effectively function as an increase in benefits for about 50% of recipients
For example, if you currently pay taxes on your $1,976 monthly benefit and this bill allows you to keep more of it, that's extra money in your pocket to cover essential expenses.
The road to approval
For this bill to become law, it will need to go through several steps in the Senate and the House of Representatives. In the Senate, it will need at least 60 votes to pass. With 53 Republican senators currently in office, they would need seven Democrats to join them in supporting the bill.
In the House, only a simple majority is needed, which is expected to be less challenging. However, the real battle will be in the Senate.
What are your thoughts?
We'd love to hear from you. Do you support this bill? Do you think it's fair that you have two taxes on your Social Security benefits, one during your working years and one in retirement? Or do you think these taxes are necessary to keep the Social Security Trust Fund solvent?
Let us know your thoughts in the comments below.
At Shoeba Español TV, we are committed to keeping you informed about the latest updates on Social Security, retirement benefits, and other financial news that impacts your life. If this bill moves forward, we will provide you with all the details and updates.
Don't forget to give this video a thumbs up, subscribe to Shoeba Español TV and turn on the notification bell so you never miss an important update. Thanks for spending your time with us today and we'll see you in the next video! Stay tuned and take care!
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