By Rob Wile —
NBC News
Millions of people will start receiving their first Social Security checks and bank deposits in January with a substantial increase for the largest Cost of Living Adjustment (COLA) in 40 years.
The median payment for retirees
will increase $146
a month to $1,827, while the median pay for people with disabilities
will increase $119
a month to $1,483.
[Everything you need to know about increasing Social Security payments to adjust the cost of living]
Beneficiaries will also enjoy a 3% decrease in the monthly payment for standard premiums in the so-called Part B of Medicare medical insurance.
The price will drop to about $165
a month.
Medicare Part B covers outpatient medical care as well as regular doctor visits.
The 8.7% increase to adjust for the cost of living is a response to the runaway inflation in the US economy.
Specifically in July, August and September, inflation reached 9%, 8.6% and 8.5%, respectively.
Meanwhile, on Tuesday the Bureau of Labor Statistics delivered moderately positive news: inflation fell to its lowest level in more than a year, standing at 7.1%.
How will payments be made?
Recipients born between the 1st and 10th of any month will receive payment on the second Wednesday of each month.
According to the Social Security Administration, the first payment for these people will arrive on January 11.
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For beneficiaries whose birthday is between the 11th and 20th of any month, payment will be made on the third Wednesday of the month.
These recipients can expect the first increased payment on January 18.
The remaining recipients will receive the payment on the fourth Wednesday of each month, which means that
the first payment of 2023 will arrive on January 25.
Supplemental Security Income (SSI) recipients will continue to receive their payments on the 1st of each month.
Taxable Payments
Except for SSI payments,
Social Security payments are still taxable
and tax brackets have also changed due to inflation.
An individual filing Social Security beneficiary with total income
—
including anything received other than Social Security
—
between $25,000 and $34,000 could have to pay up to 50% of his or her Social Security benefits in taxes .
And if their income is over $34,000, they may have to pay taxes on 85% of what they earned.
In the case of those who file taxes as a couple, the 50% threshold applies for those who declare between 32,000 and 44,000 dollars in income, and the 85% threshold for those who declare between 32,000 and 44,000 dollars.