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Yahoo
02-08-2025
- Business
- Yahoo
Social Security's 2026 Cost-of-Living Adjustment (COLA) Is Shaping Up to Be a Lose-Lose Scenario for Retirees
Key Points There's nothing of greater significance to Social Security beneficiaries than the annual cost-of-living adjustment (COLA) reveal, which is slated for Oct. 15. Based on independent estimates, Social Security's COLA is on track to do something that hasn't been observed this century. Unfortunately, retirees are contending with a double-whammy that can partially or completely sap their history-making COLA. The $23,760 Social Security bonus most retirees completely overlook › For most retired Americans, Social Security is more than just a monthly check. It represents a financial foundation that helps them make ends meet. Even though the average monthly retired-worker check only crested $2,000 for the first time in history in May, this relatively modest payout was responsible for pulling an estimated 16.3 million adults aged 65 and over above the federal poverty line in 2023, according to an analysis from the Center on Budget and Policy Priorities. For aging workers who can no longer provide for themselves, nothing is of more significance than knowing how much they'll receive each month from America's leading retirement program -- and no announcement has more relevance than the annual cost-of-living adjustment (COLA), which will be unveiled on Oct. 15. Even with Social Security's 2026 COLA currently on pace to do something that hasn't been witnessed this century, retirees are very likely staring down yet another lose-lose scenario. What is Social Security's COLA and how is it calculated? The best way to view Social Security's cost-of-living adjustment is as the tool used by the Social Security Administration (SSA) to fight back against a loss of buying power due to inflation (rising prices). For instance, if a basket of goods and services regularly bought by retirees were to increase in cost by 2% from one year to the next, Social Security benefits would need to climb by the same percentage, otherwise retirees wouldn't be able to purchase the same amount of goods and services. Social Security's COLA is the annual "raise" designed to match the inflationary pressures Social Security recipients are contending with. Beginning in 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) became the inflationary measure used to calculate COLAs on an annual basis. Prior to 1975, COLAs were assigned by special sessions of Congress on an arbitrary basis. The CPI-W has well over 200 price categories, all of which have their own respective percentage weightings. These weightings are what allow the CPI-W to be expressed as a single figure at the end of the month to determine if this basket of goods and services has, collectively, increased (inflation) or decreased (deflation) in cost. Although the CPI-W is reported monthly by the U.S. Bureau of Labor Statistics (BLS), only readings from July through September (the third quarter) factor into the cost-of-living adjustment calculation. If the average CPI-W reading from the third quarter of 2025 is higher than the comparable reading in 2024, beneficiaries can expect their monthly benefit to climb in 2026. The year-over-year percentage increase in average third-quarter CPI-W readings, rounded to the nearest tenth of a percent, represents the COLA beneficiaries will receive in the upcoming year. It's that simple. Social Security's 2026 cost-of-living adjustment is on pace to make history Though the SSA is still two and a half months away from revealing the 2026 COLA, initial independent estimates point to history being made. Throughout the 2010s, Social Security beneficiaries had little to look forward to. Deflation led to no COLA being passed along in 2010, 2011, and 2016, while 2017 featured the smallest positive COLA (0.3%) in the program's storied history. The tables have turned dramatically in recent years thanks to the COVID-19 pandemic and a surge of fiscal stimulus. A rapid increase in U.S. money supply sent the prevailing rate of inflation notably higher, which in turn produced respective COLAs of 5.9% in 2022, 8.7% in 2023, 3.2% in 2024, and 2.5% in 2025. All four of these cost-of-living adjustments are above the 2.3% average annual "raise" since 2010. Following the release of the June inflation report from the BLS, nonpartisan senior advocacy group The Senior Citizens League (TSCL) is forecasting a 2.6% bump in monthly payouts for the upcoming year. Meanwhile, independent Social Security and Medicare policy analyst Mary Johnson is looking for Social Security's COLA to come in at 2.7% in 2026. If (big "if") either TSCL or Johnson proves accurate with their respective forecasts, it would mark the first time this century that five consecutive COLAs reached at least 2.5%. The last time Social Security's cost-of-living adjustment was at least 2.5% for five straight years was 1987 through 1996. Keeping in mind that numerous variables can alter these forecasts, including President Donald Trump's tariff and trade policy, retired-worker beneficiaries could be looking at a monthly payout boost ranging from $52 to $54 in 2026. In comparison, the average worker with disabilities is on track for a monthly increase of $41 to $43, while the average survivor beneficiary can see their check climb by $41 to $42 per month in the upcoming year, based on estimates. The dreaded lose-lose scenario awaits retirees, yet again, in 2026 Unfortunately, even history-making moments for Social Security aren't enough to protect aging workers from getting the short end of the stick. On a nominal basis, a 2.6% or 2.7% COLA would be higher than the average payout increase of 2.3% since 2010. But it would almost certainly result in retirees losing buying power, which has been an ongoing theme of this century. While the CPI-W is a vast improvement over the arbitrary cost-of-living adjustments assigned by special sessions of Congress, it's still rife with flaws. Specifically, it's an index that caters to "urban wage earners and clerical workers." These are typically working-age Americans who aren't currently receiving a monthly check from Social Security. More importantly, urban wage earners and clerical workers are going to spend their money differently than seniors. For retirees, shelter and medical care services account for a larger percentage of their monthly expenditures than the typical worker. However, the CPI-W provides no added weighting for these two categories, even though 87% of Social Security's nearly 70 million beneficiaries (including disabled workers, survivors, retired workers, and all applicable spouses and children) are aged 62 and above. Based on data from the Consumer Price Index for All Urban Consumers (CPI-U), which is a similar inflationary measure to the CPI-W, shelter and medical care services inflation respectively hit 3.8% and 3.4% on a trailing-12-month basis, ended June 2025. As long as the prevailing rate of inflation for these two critical spending categories remains higher than the COLA beneficiaries receive, the purchasing power of a Social Security dollar seems destined to decline. But this is just one of two ways retirees appear set to lose in 2026. In addition to key expense categories rising at a brisk pace, the Medicare Part B premium is projected to soar next year. Part B is the segment of Medicare that deals with outpatient services, and it's usually automatically deducted from the Social Security benefit of enrollees each month. Following back-to-back years of a 5.9% increase in Part B premiums, the Medicare Trustees Report is estimating a whopping 11.5% jump to $206.20 per month in 2026. Even if Social Security's COLA comes in modestly higher than current estimates, there's an extremely high likelihood that Part B premiums will eat up a significant chunk of next year's cost-of-living adjustment for most beneficiaries. Yet again, Social Security's retirees are facing a lose-lose scenario. The $23,760 Social Security bonus most retirees completely overlook If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. Social Security's 2026 Cost-of-Living Adjustment (COLA) Is Shaping Up to Be a Lose-Lose Scenario for Retirees was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-06-2025
- Business
- Yahoo
It's Official: Social Security Retired-Worker Benefits Have Made History
Social Security provides a financial foundation for aging workers who can no longer do so for themselves. Based on the latest statistical snapshot from the Social Security Administration, the average monthly payout for retired workers hit a historic level in May. On the other hand, the purchasing power of a Social Security dollar simply isn't what it used to be. The $23,760 Social Security bonus most retirees completely overlook › In August 1935, the Social Security Act was signed into law, with the first retired-worker benefit being issued in January 1940. For decades, this prized social program has been providing a financial foundation for those who could no longer do so for themselves. Based on a recently updated analysis from the Center on Budget and Policy Priorities, Social Security helped pull more than 22 million people above the federal poverty line in 2023, 16.3 million of whom were aged 65 and above. It's also reduced the federal poverty rate for seniors to 10.1% from an estimated 37.3% if the program didn't exist. Separately, national pollster Gallup has been surveying retirees in each of the last 23 years to gauge how important their Social Security income is to making ends meet. Anywhere from 80% to 90% of respondents noted it was necessary, in some capacity, to cover their expenses. In May, the average Social Security check for retired-worker beneficiaries, who comprise the bulk of recipients, made history by surpassing a psychological milestone. Every month, the Social Security Administration (SSA) publishes what's known as its "Monthly Statistical Snapshot," which provides a detailed rundown of where every dollar in traditional Social Security outlays ends up. "Traditional" benefits refer to payouts for retired workers, survivor beneficiaries, and workers with disabilities. For example, the June statistical snapshot from the SSA shows that 69.628 million people received a benefit in May 2025. This includes more than 52.8 million retired workers, close to 5.9 million survivors of deceased workers, and 7.1 million workers with disabilities. You'll note these figures don't add up to 69.628 million, with the difference made up by spouses, children, widow(er)s, and parents of current/former beneficiaries who also qualify for a monthly check under select circumstances. The SSA's detailed monthly breakdown also allows anyone to see how much in benefits was outlaid, which includes the average benefit paid for each specific category. As a whole, $129.351 billion was dispersed in May to the aforementioned 69.628 million beneficiaries, which worked out to an average payout, across all beneficiary types, of $1,857.75. However, the highest average check of all beneficiary categories went to retired workers. For the first time in the program's 90-year history, the average Social Security retired-worker benefit crested $2,000 -- officially, it came in at $2,002.39. This average payout for retired workers has risen on a month-to-month basis for as long as the SSA has been publishing its Monthly Statistical Snapshot. This is because of the dynamic of new workers filing for and receiving initial benefits, as well as some beneficiaries dying. With wages and salaries nominally increasing over time, as well as near-annual cost-of-living adjustments (COLAs) boosting how much Social Security beneficiaries receive, it was simply a matter of time before the average Social Security retired-worker benefit hit the psychologically important $2,000 level. Unfortunately, this nominal achievement isn't reason to cheer. Despite the average retired worker now receiving a payout that begins with a "2" for the first time in the program's storied history, studies have shown that Social Security payouts have done a very poor job of keeping up with the inflationary pressures retirees have contended with since this century began. Prior to 1975, there was no rhyme or reason to how Social Security COLAs were determined or passed along. Following an entire decade without a COLA in the 1940s, Congress passed a whopping increase to benefits of 77% in 1950. Beginning in 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was "adopted" as Social Security's measure of inflation, which would allow for annual adjustments, if necessary. The CPI-W has in excess of 200 spending categories, all of which have their own unique percentage weightings. These weightings are what allow the CPI-W to be chiseled down to a single number at the end of each month, which makes for easy year-over-year comparisons to determine if this broad basket of goods and services is rising (indicating inflation) or declining (indicating deflation). Though you'd think a broad-basket inflationary index would be perfect for mirroring the prevailing rate of inflation, this simply hasn't been the case. The inherent flaw with the CPI-W can be easily seen in the latter half of its full name: "urban wage earners and clerical workers." This inflationary index is tracking the spending habits of mostly working-age Americans who aren't currently receiving a Social Security benefit. In comparison, more than 85% of Social Security beneficiaries are 62 and older. Working-age Americans and retirees budget their money differently. Whereas the former are likely to spend a higher percentage of their monthly budget on education and apparel expenses, seniors dole out more for shelter and medical care services than the typical working-age American. Unfortunately, the CPI-W doesn't account for the added importance of shelter and medical care service expenses, thus leading to a fairly persistent decline in the purchasing power of a Social Security dollar over time. According to a July 2024 study from nonpartisan senior advocacy group The Senior Citizens League, the buying power of a Social Security dollar has dropped by 20% since 2010. As long as the CPI-W remains Social Security's inflationary tether, even a record-breaking monthly benefit for retired workers is unlikely to keep pace with the pricing pressures beneficiaries are contending with. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. It's Official: Social Security Retired-Worker Benefits Have Made History was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
20-06-2025
- Business
- Yahoo
President Donald Trump Broke His Vow Not to Tax Social Security Benefits -- and Retirees Are Being Given This Concession Instead
Getting as much as possible out of Social Security isn't a luxury for most retirees -- it's a borderline necessity. Though President Trump's pledge to end the tax on Social Security benefits had overwhelming support from retirees, it would have been a fiscally irresponsible move. Trump's One, Big, Beautiful Bill offers a concession directed at low to mid earners aged 65 and up. The $23,760 Social Security bonus most retirees completely overlook › In May, the average monthly Social Security benefit for retired workers hit an important milestone by crossing above $2,000 for the first time in the program's history. Though this is a fairly modest monthly payout, Social Security income plays a foundational role for most retirees in helping make ends meet. Based on an analysis from the Center on Budget and Policy Priorities, Social Security helped pull more than 22 million people above the federal poverty line in 2023, including roughly 16.3 million adults aged 65 and above. What's more, the poverty rate for retirees would soar to an estimated 37.3% if Social Security didn't exist, compared to the 10.1% poverty rate with Social Security income, as of 2023. For many retirees, getting as much out of Social Security as possible isn't a luxury -- it's a borderline necessity to ensure a rock-solid financial foundation. When Trump campaigned on the idea of eliminating the taxation of Social Security benefits, which would allow select recipients to hang onto more of the benefits they receive, his idea garnered overwhelming support from current retirees. But with Trump's One, Big, Beautiful Bill working its way through Congress, it's become clear that the president's vow to shelve the taxation of benefits has been broken and replaced by a concession instead. On July 31, then-candidate Donald Trump posted on his social media platform Truth Social that "Seniors should not pay tax on Social Security." This message was followed up just months after his Jan. 20 inauguration with a speech during a town hall event that proclaimed: In the coming weeks and months, we will pass the largest tax cuts in American history -- and that will include no tax on tips, no tax on Social Security, and no tax on overtime. It's called The One, Big Beautiful Bill. Based on an informal poll from nonpartisan senior advocacy group The Senior Citizens League, well over 90% of retired survey-takers believe Social Security benefits shouldn't be subject to federal taxation. Taxing a portion of Social Security benefits for select individuals and jointly filing couples was implemented following the signing of the Social Security Amendments of 1983 into law. Beginning in 1984, up to 50% of benefits could be subject to the federal tax rate if provisional income -- adjusted gross income + tax-free interest + one-half of benefits -- surpassed $25,000 for single filers and $32,000 for couples filing jointly. A second tax tier allowing up to 85% of Social Security benefits to be subject to the federal tax rate was added a decade later for individuals and joint filers topping $34,000 and $44,000 in provisional income, respectively. Aside from the common misconception that this represents a form of double taxation, the reason the tax on benefits is so disliked is because these income thresholds that were introduced in the mid-1980s and mid-1990s haven't once been adjusted for inflation. Due to rising wages and salaries over time, coupled with near-annual cost-of-living adjustments (COLAs), the percentage of senior households subject to this tax has grown from around 10% four decades ago to approximately 50% of all senior households today. The president's One, Big, Beautiful Bill, which was narrowly passed by the House of Representatives and is currently being discussed by lawmakers in the Senate, covers a laundry list of tax changes. It would make the personal income tax brackets under the Tax Cuts and Jobs Act (which are on track to sunset on Dec. 31, 2025) permanent, increase the state and local income tax deduction, and provide temporary tax relief for overtime pay and tips for four years to qualified individuals. But one key provision that's missing is Trump's vow to eliminate the tax on Social Security benefits. If you're wondering why this promise failed to pass muster, look no further than the economics supporting America's leading social program. Social Security has three sources of funding: The 12.4% payroll tax on wages and salary up to $176,100 (as of 2025). In 2023, the payroll tax accounted for north of 91% of the income collected. The interest income earned on the asset reserves of the Old-Age and Survivors Insurance trust fund (OASI) and Disability Insurance trust fund. This excess capital is required by law to be invested in special-issue, interest-bearing government bonds. The taxation of Social Security benefits. The OASI's asset reserves are forecast to run dry by 2033. Though the OASI is in no danger of bankruptcy or insolvency, it does mean most of Social Security's interest income will go away over the next eight years. Furthermore, depleting the OASI's asset reserves would result in sweeping benefit cuts of up to 21% in eight years for retired workers and survivor beneficiaries, according to the 2024 Social Security Board of Trustees Report. Removing the tax on benefits at a time when Social Security is financially challenged would be a fiscally poor decision that can expedite the OASI's asset reserve depletion timeline and potentially result in steeper sweeping benefit cuts. Additionally, President Trump may not have wanted to risk the passage of the One, Big, Beautiful Bill on his "no tax on Social Security" provision. Amending the Social Security Act requires 60 votes in the upper house of Congress, and it's not even clear if all 53 members of his party in the Senate would vote in favor of such a measure. Rather than risk the potential embarrassment of defeat, the president left this provision out of his flagship bill. Although retirees aren't going to be getting rid of the hated tax on Social Security benefits anytime soon, the president and/or lawmakers did throw a concession into The One, Big, Beautiful Bill that's designed to help retirees who need it most. Donald Trump's original plan to shelve the tax on benefits would have padded the pocketbooks of Social Security's highest earners -- i.e., the roughly 50% of senior households whose provisional income surpassed the thresholds that trigger federal taxation on a portion of their Social Security income. The concession placed in The One, Big, Beautiful Bill is designed to reward low- and middle-income retirees who need the financial boost. Keeping in mind that bills are subject to change in Congress, one of the key provisions for retirees in the current bill would temporarily increase the standard deduction for single filers aged 65 and above by $4,000 (and $8,000 for qualifying couples filing jointly) from 2025 through 2028. The catch is that single filers and joint-filing couples would need to have modified adjusted gross incomes below $75,000 and $150,000, respectively, before a phase-out would kick in. This ensures that low- to mid-income retirees are the ones who'd receive the boost in their standard deduction. This enhanced deduction would come atop the extra $2,000 single filers and $3,200 married filers are already able to deduct if aged 65 and above. While this beefed-up standard deduction for seniors aged 65 and older is far less, in nominal dollar terms, than what would be seen if the taxation of benefits was eliminated, it does direct the benefit to those who need it most and likely rely on Social Security as a necessary source of income. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. President Donald Trump Broke His Vow Not to Tax Social Security Benefits -- and Retirees Are Being Given This Concession Instead was originally published by The Motley Fool
Yahoo
19-06-2025
- Business
- Yahoo
President Donald Trump Broke His Vow Not to Tax Social Security Benefits -- and Retirees Are Being Given This Concession Instead
Getting as much as possible out of Social Security isn't a luxury for most retirees -- it's a borderline necessity. Though President Trump's pledge to end the tax on Social Security benefits had overwhelming support from retirees, it would have been a fiscally irresponsible move. Trump's One, Big, Beautiful Bill offers a concession directed at low to mid earners aged 65 and up. The $23,760 Social Security bonus most retirees completely overlook › In May, the average monthly Social Security benefit for retired workers hit an important milestone by crossing above $2,000 for the first time in the program's history. Though this is a fairly modest monthly payout, Social Security income plays a foundational role for most retirees in helping make ends meet. Based on an analysis from the Center on Budget and Policy Priorities, Social Security helped pull more than 22 million people above the federal poverty line in 2023, including roughly 16.3 million adults aged 65 and above. What's more, the poverty rate for retirees would soar to an estimated 37.3% if Social Security didn't exist, compared to the 10.1% poverty rate with Social Security income, as of 2023. For many retirees, getting as much out of Social Security as possible isn't a luxury -- it's a borderline necessity to ensure a rock-solid financial foundation. When Trump campaigned on the idea of eliminating the taxation of Social Security benefits, which would allow select recipients to hang onto more of the benefits they receive, his idea garnered overwhelming support from current retirees. But with Trump's One, Big, Beautiful Bill working its way through Congress, it's become clear that the president's vow to shelve the taxation of benefits has been broken and replaced by a concession instead. On July 31, then-candidate Donald Trump posted on his social media platform Truth Social that "Seniors should not pay tax on Social Security." This message was followed up just months after his Jan. 20 inauguration with a speech during a town hall event that proclaimed: In the coming weeks and months, we will pass the largest tax cuts in American history -- and that will include no tax on tips, no tax on Social Security, and no tax on overtime. It's called The One, Big Beautiful Bill. Based on an informal poll from nonpartisan senior advocacy group The Senior Citizens League, well over 90% of retired survey-takers believe Social Security benefits shouldn't be subject to federal taxation. Taxing a portion of Social Security benefits for select individuals and jointly filing couples was implemented following the signing of the Social Security Amendments of 1983 into law. Beginning in 1984, up to 50% of benefits could be subject to the federal tax rate if provisional income -- adjusted gross income + tax-free interest + one-half of benefits -- surpassed $25,000 for single filers and $32,000 for couples filing jointly. A second tax tier allowing up to 85% of Social Security benefits to be subject to the federal tax rate was added a decade later for individuals and joint filers topping $34,000 and $44,000 in provisional income, respectively. Aside from the common misconception that this represents a form of double taxation, the reason the tax on benefits is so disliked is because these income thresholds that were introduced in the mid-1980s and mid-1990s haven't once been adjusted for inflation. Due to rising wages and salaries over time, coupled with near-annual cost-of-living adjustments (COLAs), the percentage of senior households subject to this tax has grown from around 10% four decades ago to approximately 50% of all senior households today. The president's One, Big, Beautiful Bill, which was narrowly passed by the House of Representatives and is currently being discussed by lawmakers in the Senate, covers a laundry list of tax changes. It would make the personal income tax brackets under the Tax Cuts and Jobs Act (which are on track to sunset on Dec. 31, 2025) permanent, increase the state and local income tax deduction, and provide temporary tax relief for overtime pay and tips for four years to qualified individuals. But one key provision that's missing is Trump's vow to eliminate the tax on Social Security benefits. If you're wondering why this promise failed to pass muster, look no further than the economics supporting America's leading social program. Social Security has three sources of funding: The 12.4% payroll tax on wages and salary up to $176,100 (as of 2025). In 2023, the payroll tax accounted for north of 91% of the income collected. The interest income earned on the asset reserves of the Old-Age and Survivors Insurance trust fund (OASI) and Disability Insurance trust fund. This excess capital is required by law to be invested in special-issue, interest-bearing government bonds. The taxation of Social Security benefits. The OASI's asset reserves are forecast to run dry by 2033. Though the OASI is in no danger of bankruptcy or insolvency, it does mean most of Social Security's interest income will go away over the next eight years. Furthermore, depleting the OASI's asset reserves would result in sweeping benefit cuts of up to 21% in eight years for retired workers and survivor beneficiaries, according to the 2024 Social Security Board of Trustees Report. Removing the tax on benefits at a time when Social Security is financially challenged would be a fiscally poor decision that can expedite the OASI's asset reserve depletion timeline and potentially result in steeper sweeping benefit cuts. Additionally, President Trump may not have wanted to risk the passage of the One, Big, Beautiful Bill on his "no tax on Social Security" provision. Amending the Social Security Act requires 60 votes in the upper house of Congress, and it's not even clear if all 53 members of his party in the Senate would vote in favor of such a measure. Rather than risk the potential embarrassment of defeat, the president left this provision out of his flagship bill. Although retirees aren't going to be getting rid of the hated tax on Social Security benefits anytime soon, the president and/or lawmakers did throw a concession into The One, Big, Beautiful Bill that's designed to help retirees who need it most. Donald Trump's original plan to shelve the tax on benefits would have padded the pocketbooks of Social Security's highest earners -- i.e., the roughly 50% of senior households whose provisional income surpassed the thresholds that trigger federal taxation on a portion of their Social Security income. The concession placed in The One, Big, Beautiful Bill is designed to reward low- and middle-income retirees who need the financial boost. Keeping in mind that bills are subject to change in Congress, one of the key provisions for retirees in the current bill would temporarily increase the standard deduction for single filers aged 65 and above by $4,000 (and $8,000 for qualifying couples filing jointly) from 2025 through 2028. The catch is that single filers and joint-filing couples would need to have modified adjusted gross incomes below $75,000 and $150,000, respectively, before a phase-out would kick in. This ensures that low- to mid-income retirees are the ones who'd receive the boost in their standard deduction. This enhanced deduction would come atop the extra $2,000 single filers and $3,200 married filers are already able to deduct if aged 65 and above. While this beefed-up standard deduction for seniors aged 65 and older is far less, in nominal dollar terms, than what would be seen if the taxation of benefits was eliminated, it does direct the benefit to those who need it most and likely rely on Social Security as a necessary source of income. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. President Donald Trump Broke His Vow Not to Tax Social Security Benefits -- and Retirees Are Being Given This Concession Instead was originally published by The Motley Fool Sign in to access your portfolio
CNN
12-06-2025
- Politics
- CNN
Senate GOP aims to pare back proposed food stamp work requirements for parents in Trump megabill
The Senate Agriculture Committee is proposing some notable changes to the controversial food stamp provisions in the House-approved version of Republicans' megabill. The committee, which unveiled its proposal on Wednesday, would dial back the introduction of work requirements for parents of dependent children in the Supplemental Nutrition Assistance Program, or SNAP, the formal name for food stamps. The Senate version would mandate that parents of children ages 10 and older work to maintain their benefits, while the House package would impose that requirement on parents of children ages 7 and older. Currently, parents of dependent children are exempt from the program's work mandate. (A summary released by the committee said that the work requirement would apply to parents of children over age 10, which conflicts with the text of the proposal. A committee spokeswoman confirmed to CNN that the provision would apply to parents of 10-year-olds and older children.) The Senate committee also drops the exemptions for veterans, people experiencing homelessness and young adults who have aged out of foster care, according to Katie Bergh, a senior policy analyst at the left-leaning Center on Budget and Policy House version includes the exemptions but ends them in 2030. Like the House version, the Senate would expand the food stamp program's existing work requirements to able-bodied adults ages 55 through 64 and would curtail states' ability to receive work requirement waivers in difficult economic times, limiting them only to areas with unemployment rates above 10%. Both versions would also bar refugees, those granted asylum and certain survivors of domestic violence or labor or sex trafficking, among other immigrants with legal status, from receiving food stamps. Currently, adults ages 18 to 54 without dependent children can only receive food stamps for three months over a 36-month period unless they work 20 hours a week or are eligible for an exemption. The Senate measure aims at 'helping recipients transition to self-sufficiency through work and training. It's about being good stewards of taxpayer dollars while giving folks the tools to succeed,' Arkansas Sen. John Boozman, the committee's chair, said in a statement. But advocates lashed out at the Senate plan, saying it would worsen hunger in the US. Some 42 million people receive food stamps. 'The proposal would also take food assistance away from millions of parents and grandparents who are working but get tangled in red tape, have a health condition but fall through the cracks and don't get an exemption, or are between jobs and need temporary help,' Ty Jones Cox, vice president for food assistance at the Center on Budget and Policy Priorities, said in a statement. Senators in multiple committees are currently negotiating pieces of the House's sweeping tax and spending cuts bill, which aims to fulfill President Donald Trump's agenda. The House, which passed the package last month, would enact the deepest cuts to food stamps in the program's history – reducing federal spending by nearly $300 billion, according to the Congressional Budget Office. The work requirement provision would result in 3.2 million fewer people receiving benefits in an average month between 2025 and 2034, according to a preliminary CBO estimate of the House bill. That includes 800,000 adults who live with dependent children. Both the Senate and House versions would require that states start covering part of the cost of food stamp benefits for the first time, though the Senate committee is calling for a smaller share. States' tab would depend on their payment error rate in the program. In the Senate version, states with error rates below 6% would not have to contribute to the cost of benefits. The amount would then ratchet up in stages, with states that have error rates of 10% or more paying a 15% share. The House version would require all states to shoulder at least 5% of the cost and as much as 25% for those with error rates of at least 10%. Both versions would increase states' share of the program's administrative costs to 75%, from 50%. Advocates and state officials have warned that asking states to pick up more of the costs would have dire consequences. 'Shifting the financial burden of SNAP onto states is fiscally unsustainable and risks harming the very individuals and families the program is designed to support,' Tim Storey, CEO of the National Conference of State Legislatures, wrote to House Agriculture Committee leaders last month. State agencies are 'already underfunded and understaffed,' said Crystal FitzSimons, president of the Food Research & Action Center, in a statement Wednesday. Shifting more of the cost to states would leave 'strained state budgets unable to absorb the added burden without raising taxes, cutting programs, or reducing access.' How states would respond to having to pay for a share of the food stamp benefits would vary, but some 'would modify benefits or eligibility and possibly leave the program altogether because of the increased costs,' according to a preliminary CBO analysis of the House bill. The provision would lead states to reduce or eliminate food stamp benefits for about 1.3 million people in an average month over the decade, CBO estimates.
