The US Social Security Administration announced today that Social Security recipients will be getting a pay increase in 2012. Here is a link to the press release. A cost of living adjustment is based on the Consumer Price Index, which did not increase in 2010 or 2011, so this is the first increase of its kind since 2009.
The 3.6 percent cost of living adjustment will benefit some 60 million social security beneficiaries across the nation. However, by SSA’s own admission, some of these people will see no increase at all due to an increase in Medicare premiums. So, no change really.
The SSA also announced that the maximum amount of earnings subject to the Social Security tax will increase from $106,800 to $110,100, affecting about 10 million taxpayers. However, some of these people may be able to offset the tax increase by finding additional credits and deductions. So, no change there either.
Even if you’re not one of the 10 million, you’re not out of the woods. You’re not getting tax relief anytime soon either. The temporary 2011 Social Security tax rate reduction (from 6.2% to 4.2%) — which affects all workers — will expire if nothing more is done to either revive it or further reduce it.