SSA

What is the marriage penalty under social security? Up until 1983 social security benefits were not taxed but starting that year income over $25,000 for single people and $32,000 for married couples became subject to tax. Those values, called threshold, have not changed. If they had been indexed to inflation, they would now be $75,000 and $95,000 and this is being suggested as a way to remove taxes from lower income people while still taxing those in the higher income. Take an example using today rules for a couple who are both collecting SS and have pensions. John and Mary both receive $2,000 per month from SS and both have $2,500 per month pensions. Their taxes are $9,000. If they were single and filed individually, they would each owe $4,000. If the threshold numbers were indexed to inflation neither of these groups would owe taxes. Instead of removing taxes from social security it would be better to just index the thresholds and this would remove tax on middle income people while maintaining the tax on the wealthy.