Social Security has brought a lot of important changes in 2023. The main difference with respect to 2023, is the boost that benefits have received. As it was such an important increase in decades, you might have already heard of it. There was skyrocketing inflation and to cope with it, Social Security decided to catch up. The last COLA was a staggering 8.7 percent and meant 146 dollars on average for retirement benefits per month.
The second main change has to do with Medicare. Bear in mind that the standard Part B premium has gone down. It was 170.10 dollars per month in 2022, while it costs 164,90 dollars monthly in 2023. There is not a big difference but every little bit counts. As for Social Security taxes, there have been no changes. Remember that you and your employer pay 12.4% in tax on your work earnings.
Social Security tax rates have not changed
However, despite the fact that they have not changed for a few years, what has changed is the amount of income subject to taxes. In 2023, you will have to pay taxes on work income up to 160,200 dollars. Therefore, you and your employer will not have to pay Social Security taxes on earnings over that threshold. Moving on to the next change dealing with Social Security earnings limits.
Those who get either survivor, family, or retirement benefits under the Full Retirement Age and keep working may exceed their earnings limit. The earning test threshold is now $21,240 for beneficiaries under FRA. If you exceed 2 dollars, Social Security withholds $1 from your benefits. For those who will get FRA in 2023, SSA deducts 1 dollar for every 3 over the limit -$56,520-.
What are the changes dealing with benefits requirements?
In order to qualify for Social Security retirement or disability benefits, you need work credits. For instance, to get retirement benefits you need 40 credits which means you have worked for about ten years. Four credits per year are the maximum you can earn. To get one credit, you must have worked and paid taxes to SSA. So, you get one credit when your earnings are 1,640 dollars in 2023.
This is a new amount because last year you needed less money to get one credit, therefore, it has become more “expensive” to get one. Thus, in order to get the four credits annually you will have to get 6,560 dollars in income this year.