Press Releases

Economic Brief

Nov. 7, 2017

Richmond Fed Research Seeks More Efficient Ways to Tax Social Security Benefits

There may be more efficient ways of taxing Social Security benefits, according to the latest Economic Brief from the Federal Reserve Bank of Richmond.

Many seniors pay taxes on their Social Security benefits, and the taxable portion of their benefits rises as their overall incomes increase. This tax structure can impose higher marginal tax rates on seniors even if their other income sources are relatively modest. These higher marginal rates, in turn, can determine whether seniors decide to retire or continue working. Research by John Bailey Jones of the Richmond Fed and Yue Li of the University at Albany, State University of New York, suggests that several policy alternatives — including taxing benefits like regular income — are more likely to keep seniors in the workforce and to generate more revenue for the Social Security Trust Fund.

The Richmond Fed’s Economic Brief series provides web-exclusive essays on current economic issues and trends. Sign up to receive an email notification when a new essay is posted.


The Richmond Fed serves the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. As part of the nation's central bank, we're one of 12 regional Reserve Banks that work together with the Federal Reserve's Board of Governors to strengthen the economy and our communities. We manage the nation's money supply to keep inflation low and help the economy grow. We also supervise and regulate financial institutions to help safeguard our nation's financial system and protect the integrity and efficiency of our payments system.

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