Social Security's cost of living adjustment for 2025 was 2.8 percent. Part of that raise can go straight back out as federal income tax.
The reason is four dollar amounts written into the law in 1983 and never adjusted for inflation: $25,000 and $34,000 for a single filer, $32,000 and $44,000 for a married couple filing jointly. Your benefit rises almost every year, because that is what the cost of living adjustment is for. Those four lines have not moved in four decades.
In 1984, the first year the tax existed, about 8 percent of beneficiary families owed federal income tax on their benefits. By 2003, that share had reached 39 percent. The Social Security Administration's own model projects an annual average of 56 percent from 2015 through 2050 — and not one tax rate was raised to produce it.
What the thresholds would be worth today
Corrected for inflation, the $32,000 threshold for a married couple filing jointly would stand at $96,612 today. The $25,000 threshold for a single filer would be $75,478. Same rules — with the inflation put back in.
Watch the full breakdown
This piece walks the full arithmetic — the "tax torpedo," why the price index that sets your raise isn't measured on retirees, what the tax now collects for Social Security and Medicare, and the honest objection to this argument. Watch it on YouTube: youtube.com/@TheCostOfLivingUS
Sources
SSA, Research Note ip2015-02, "Income Taxes on Social Security Benefits" — ssa.gov/policy/docs/issuepapers/ip2015-02.html
SSA, 2025 OASDI Trustees Report, Tables IV.B2 and III.A3 — ssa.gov/oact/tr/2025/
IRS, Publication 915, Social Security and Equivalent Railroad Retirement Benefits — irs.gov/publications/p915
Congressional Research Service, R48485 "Economic Effects of the Tax Cuts and Jobs Act" and IF12675 "A Hypothetical Social Security COLA Based on the R-CPI-E" — congress.gov/crs-product
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