Social Security COLAs for 2010

Automatic cost-of-living adjustments (COLAs) were created for Social Security benefits in 1975. For the first time since then, in 2010 there was no COLA. Here are the basic Social Security numbers for your reference.

Tax rate for employees 7.65%

Tax rate for self-employed 15.30%

Maximum earnings taxable

Social Security wage base $106,800

Medicare wage base no limit

Retirement earnings test exempt amounts

Under full retirement age $14,160

($1 in benefits is withheld for every $2 in earnings above the limit.)

For the year in which full retirement age is reached $37,680

($1 in benefits is withheld for every $3 in earnings above the limit,

but only for months prior to reaching full retirement age.)

After full retirement age is reached no limit

Taxation of Social Security benefits

Singles with a “provisional income”*

below $25,000 no tax on benefits

from $25,000 to $34,000 tax on 50% of benefits

over $34,000 tax on up to 85% of benefits

Marrieds filing a joint return with a “provisional income”*

below $32,000 no tax on benefits

from $32,000 to $44,000 tax on 50% of benefits

over $44,000 pays tax on up to 85% of benefits

*The IRS defines “provisional income” as your modified adjusted gross income (MAGI) plus nontaxable interest plus one-half of your Social Security benefits. (MAGI is adjusted gross income plus tax-exempt income.)

(February 2010)

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