A new bill winding its way through Congress aims to increase retirees’ net income from Social Security by eliminating federal taxation of benefits. Unless the You’ve Earned It Act miraculously becomes law, it is important that you understand how your Social Security benefits are taxed at the federal level.
You’ve contributed towards your Social Security benefits for decades (via your paychecks). If you have a well-funded retirement income plan to maintain a nice living standard, you will likely get hit with income taxes in retirement. The more retirement income you have, the more taxes you likely will pay. The myth that Social Security is not taxed is just that, a myth.
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