The Social Security Administration (SSA) has announced that Social Security and Supplemental Security Income (SSI) benefits will increase by 1.5 percent in 2014. The rates for Old-Age, Survivors and Disability Insurance (OASDI) and Medicare Hospital Insurance (HI) taxes will remain at a combined 7.65 percent in 2014. Based on the increase in SSI benefits, the maximum taxable earnings for OASDI purposes will increase from $113,700 to $117,000.
The SSA cost-of-living adjustments (COLAs) are based on the rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2012 through the third quarter of 2013. For Social Security beneficiaries, the average monthly benefit amount for all retired workers will increase from $1,275 to $1,294. The monthly SSI federal payment standard for an individual will increase from $710 to $721; for a couple, the payment will increase from $1,066 to $1,082.
For the year in which an individual attains full retirement age, the retirement earnings test exempt amount will increase from $40,080 a year to $41,400 a year. The test applies to earnings for months prior to reaching full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit. No limit on earnings will be imposed beginning in the month in which the individual reaches full retirement age.
For retirees under full retirement age, the retirement savings test exempt amount will increase from $15,120 a year to $15,480 a year, with $1 withheld for every $2 in earnings above the limit.
Social Security Administration Press Release, Social Security Announces 1.5 Percent Benefit Increase for 2014, 2013FED ¶46,546
Social Security Administration Fact Sheet, 2014 Social Security Changes, 2013FED ¶46,547
Code Sec. 1401
CCH Reference – 2013FED ¶32,543.01
CCH Reference – 2013FED ¶32,543.07
CCH Reference – 2013FED ¶32,543.26
Code Sec. 1402
CCH Reference – 2013FED ¶32,580.01
Tax Research Consultant
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