In 1935, President Franklin D. Roosevelt signed the Social Security Act. Part of this was a program that gave monthly benefits to workers who were retired and aged 65 and above. Two years later, taxes started being collected. Both employers and workers had to pay 1% for their first $3,000 in earnings.
Then, in 1983, President Ronald Reagan signed legislation concerning the taxation on Social Security benefits. This also dictated that full retirement benefits will see incremental increases to those aged 67.
A couple decades later in the year 2000, President Bill Clinton signed legislation that removed the retirement earnings test. This would be applicable to individuals who are over the full benefit retirement age. The test was done as a mandate for beneficiaries, stipulating that they turn over a portion of their Social Security benefits when their overall earnings reach a particular amount.
The taxation of Social Security benefits began in 1983 under the Social Security Amendments signed by President Ronald Reagan.
Taxes on Social Security benefits were introduced as part of a larger plan to address the financial solvency of the Social Security system.
Depending on income, up to 85% of a person's Social Security benefits can be subject to federal income tax.
Want to know more about what Social Security benefits include? Contact Senior Strong today.
