May 2023 update regarding potential COLA rate decrease for 2024.
New estimates suggest that the increase in Social Security payments for 2024 may not be as big as the record-breaking increase seen in 2023.
An advocacy group called the Senior Citizens League predicts that the increase could be around 3.1% for 2024, but they are worried that it might not be enough to help seniors who are struggling with rising costs.
The group says that the way the increase is calculated doesn’t accurately reflect the things that seniors spend their money on, like prescription drugs, food, housing, and dental services.
The official increase for 2024 will be announced in October.
Starting in January, Veterans will see a 8.7% increase in their monthly VA benefits. This is a whopping 2.8% difference from 2022.
This increase is based on the rising inflation, increasing prices of consumer goods, and rising gas prices. It is the largest increase since the 11.2% adjustment in 1981.
Using 2022’s compensation rates, we can estimate VA disability payments for 2023. Official finalized figures will be announced on December 1, 2022.
2023 VA COLA Increase
|wdt_ID||Combined VA Rating||2023 VA Compensation Rates (8.7% increase)||2022 VA Compensation Rates|
|Combined VA Rating||2023 VA Compensation Rates (8.7% increase)||2022 VA Compensation Rates|
This means Veterans with a 100 percent disability rating, with no dependents, will see an additional $289.89 added to their disability compensation. This comes to a grand total of $3,621.95 per month.
In comparison, in 2022 a 100 percent disabled Veteran’s rate netted $3,332.06. That’s an extra $289.89 a month compared to 2022!
Changes for Veterans with Parents
|wdt_ID||Rating||Married with One Parent||Married with Two Parents||Single with One Parent||Single with Two Parents|
Changes for Veterans with Children
|wdt_ID||Rating||Single, One Child||Single, Two Children||Married, One Child||Married, Two Children|
What are cost of living adjustments?
A cost-of-living adjustment is an increase of income so that the recipient can keep up with increasing basic living costs in relation to this “thing” called the CPI.
What is the CPI? The Department of Labor’s (DOL) Bureau of Labor Statistics (BLS) tracks the Consumer Price Index (CPI).
Do Cost of living adjustments affect my taxes?
Again, each individual’s circumstances are different. It may be in your best interest to seek professional guidance for your tax questions. However, there are some general guidelines provided here to address this issue.
As a general rule, disability compensation and pension benefits paid to a Veteran or their families are excluded from federal taxable income; military retirement based on disability is also excluded from federal taxable income (if the Veteran meets certain criteria – click HERE to see criteria). DIC benefits are tax-free as well.
However, military retirement based on age or length of service is taxable income.
It is worthwhile to note that there are special tax considerations for Veterans, including possible refunds after a Veteran receives a determination of a service-connected disability. Click HERE for the IRS explanation.
COLA and VA Disability Rates Over the Last Few Years
|2022 COLA||2021 COLA||2020 COLA|
|5.9 percent increase||1.3 percent increase||1.6 percent increase|
The 5.9 percent COLA boost that was announced in November 2021 was applied to December 2021 compensation payments, and it was reflected in January 2022 compensation payments.
In 2021 and 2022, COLA rises were less than 2% on average. The 2022 adjustment, until this year, was the biggest raise since nearly 40 years.
What to do to receive new COLA 2023
Nothing! Cost of living adjustments do not require any additional application from benefit recipients. You do not need to request or apply for them. Although an increase certainly does not happen every year, if an increase is determined, benefit recipients will automatically receive it. Finally, if you feel you are deserving of a higher rating for your VA disability, please talk to us!
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