Next year’s 3.6% cost-of-living adjustment (COLA) will put more money in the pockets of nearly 72 million Social Security beneficiaries, according to the Social Security Administration (SSA). For some retirees, it could also nudge them across an income line that decides whether the IRS can tax part of those benefits.<\/p>\n
That line has one unusual feature: unlike the COLA itself, it does not rise with inflation. As the IRS updates the 2027 brackets and the deductions for people over 65<\/a>, here is how the math works and how to tell whether your raise matters at tax time.<\/p>\n The IRS looks at what it calls combined income. You take half of your Social Security benefits and add all your other income, including pensions, wages, interest, dividends and tax-exempt interest.<\/p>\n According to IRS Publication 915<\/a>, then you compare that total with these limits:<\/p>\n Those percentages describe how much of your benefit can count as taxable income, not the tax rate. Nobody pays 85% of their Social Security to the IRS.<\/p>\n Picture a single retiree who receives $2,000 a month and has $13,000 a year from a small pension. In 2026, half of the benefits ($12,000) plus the pension comes to exactly $25,000, right at the limit.<\/p>\n With a 3.6% raise, the monthly benefit climbs to $2,072, or $24,864 for the year. Half of that plus the same pension is $25,432. That retiree is now $432 over the line, even though nothing else has changed.<\/p>\n The practical effect is small here. Only about $216 of benefits would become taxable income, and with the standard deduction this person probably still owes no federal income tax. The point is that the limit is fixed while benefits keep growing, so more retirees cross it every year.<\/p>\n The raise matters more for people who already have other income. Take a couple filing jointly with $48,000 in benefits and $30,000 from pensions and investments. Their combined income is $54,000 this year and $54,864 in 2027, assuming their other income doesn’t change.<\/p>\n Because they are above $44,000, the worksheet in Publication 915 adds roughly $734 to their taxable income. At a 12% rate, that works out to about $88 more in federal tax for the year. It won’t erase the raise, but it does trim it.<\/p>\n Remember, too, that 2027 benefits are reported on the return you file in 2028. A few states also tax Social Security under their own rules, so it pays to check where you live.<\/p>\n You can’t change the limits, but you can avoid a surprise at tax time:<\/p>\n If your situation is more complicated, a tax professional or an IRS-sponsored volunteer site can run the numbers with you before you file.<\/p>\n","protected":false},"excerpt":{"rendered":" The 2027 COLA raises benefits, but the IRS income limits for taxing them stay frozen. Here’s who could be affected.<\/p>\n","protected":false},"author":1,"featured_media":292498,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[12,10,2],"class_list":["post-292499","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-cola","tag-retirement","tag-social-security"],"_links":{"self":[{"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/posts\/292499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/comments?post=292499"}],"version-history":[{"count":1,"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/posts\/292499\/revisions"}],"predecessor-version":[{"id":292508,"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/posts\/292499\/revisions\/292508"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/media\/292498"}],"wp:attachment":[{"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/media?parent=292499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/categories?post=292499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tododisca.es\/en\/wp-json\/wp\/v2\/tags?post=292499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Where exactly is the line?<\/h2>\n
\n
How can a raise push you over?<\/h2>\n
Who should pay the most attention?<\/h2>\n
What can you do about it?<\/h2>\n
\n