The Social Security Administration recently announced several changes to Social Security for 2022. The main one being that Social Security benefits will see a cost-of-living adjustment of 5.9% for 2022. This is up from 1.3% for 2021. Those pulling Social Security will receive this increase in benefits starting in 2022.
For those who are younger than the full retirement age and still working while pulling Social Security benefits, the wage limit before benefits are reduced (by $1 for every $2 earned over the limit) increased to $19,560 for 2022.
The Social Security wage limit for 2022 is increasing to $147,000. This is a $4,200 limit increase from 2021 and will result in an additional $260.40 in Social Security withheld for affected employees.
The 1.45% Medicare tax has no wage limit and there are no changes for 2022. The additional Medicare tax of .9% on wages earned after $200,000 ($250,000 for married filing jointly) also did not change for 2022.
Like prior years, the amount of your Social Security benefits that are taxed is based on your income. At a maximum, 85% of your benefits will be taxed if your income is over $34,000 ($44,000 for married filing jointly.) There are some complexities in the calculation of how much of your Social Security is taxed so if you would like to know more, please reach out to us!