Today the Social Security Administration (“SSA”) announced that the cost of living adjustment (“COLA”) for 2020 will be 1.6%.

The 2019 and 2018 COLAs were 2.8% and 2.0% respectively marking the 2020 change as a slowing of the rate of increase.  Conversely it’s an improvement over years such as 2010, 2011 and 2016 when the SSA provided no COLA.  On average the COLA has come in at 1.4% for the past decade.

 

In calculating the COLA the SSA used the Consumer Price Index for Urban Wage Earners and Clerical Workers as provided by the Bureau of Labor Statistics.

Although SS benefits will be increased by the COLA the tax threshold will remain unchanged.  Individuals earning $25,000+ ($32,000+ for a married couple filing a joint return) could be subject to income taxes on SS benefits.

In a related item the amount of an individual’s wages subject to SS payroll taxes will increase.  In 2019 wage income up to and including $132,900 is subject to the 6.2% tax.  That figure will increase to $137,700 for 2020.