How Will Social Security Change in 2023?

Social Security recipients receive annual benefit adjustments to address inflation effects, but the cost-of-living adjustment represents just one of several yearly modifications to the system.

Five Key Social Security Changes for 2023

1. Benefit Increase

Recipients will experience an 8.7% boost in monthly payments during 2023, translating to approximately $146 extra per month. This cost-of-living adjustment helps counteract inflation’s impact. However, some retirees may see reduced gains because Medicare Part B premiums are deducted from certain beneficiaries’ Social Security payments.

2. Earnings Limit for Working Retirees

Those claiming retirement benefits before reaching full retirement age (FRA) while continuing employment face potential benefit reductions if earnings exceed applicable limits. For 2023, the threshold rises from $19,560 to $21,240 for those reaching FRA after 2023, and from $51,960 to $56,520 for those reaching FRA in 2023. Importantly, withheld benefits due to excess earnings are not permanently lost.

3. Tax Cap on Workers’ Income

The maximum income subject to Social Security payroll taxes increases from $147,000 in 2022 to $160,200 in 2023. Consequently, higher earners will not pay Social Security taxes on income exceeding this threshold. The payroll tax rate remains unchanged at 6.2% for employees and 12.4% for self-employed individuals.

4. Work Credits Requirement

To qualify for retirement benefits, most workers need 40 “credits” accumulated throughout their careers. Currently, individuals can earn up to four credits annually through employment and tax payments. The earnings needed to obtain one credit (representing a quarter of coverage) rises from $1,510 in 2022 to $1,640 in 2023.

5. Maximum Benefit Amount

Social Security caps monthly retirement payments based on claiming age. The maximum benefit for those retiring at full retirement age increases from $3,345 monthly in 2022 to $3,627 in 2023.

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