The Fact
Before the Social Security Amendments of 1983, Social Security benefits were generally excluded from federal income taxation. The 1983 law made up to 50% of benefits potentially taxable for beneficiaries whose combined income exceeded statutory thresholds, effective for tax years beginning after 1983.
What This Means
The retirement system changed in another important way during Gen X childhood: Social Security benefits could become part of taxable income. Retirement income was no longer automatically outside the federal income-tax calculation.
Sources
- Social Security Administration, “Taxation of Social Security Benefits,” history of the 1983 Amendments.