Kiplinger's Personal Finance July 2022

One income tax item that has never been adjusted for inflation is the formula for computing the taxation of our Social Security income (“Ahead,” May). Social Security income became taxable in 1984 after a bill was passed in Congress by a bipartisan vote. This bill authorized the taxation of Social Security benefits up to 50%. Then in 1993, the income tax law was further changed to include 35% more of our Social Security benefits, making it 85% in total, if under the revised formula the computed income exceeded $34,000 for single filers and $44,000 for married couples filing joint returns. Current tax law still includes these same dollar limits, as the limits have never been increased due to inflation. This results in more tax being paid annually than if these…

Retirement is promoted as a time to kick back and relax. But when it comes to your finances, you may find that the best advice is to fasten your seat belts for a bumpy ride. I just turned 65, and my wife, Allyson, and I have been meeting with our financial planner to run some what-if scenarios for retirement. This is a useful exercise that preretirees often overlook. Leading up to retirement, we tend to focus on our “number,” on saving a certain amount by a certain age. Once we retire, we focus on withdrawal strategies to make our nest egg last for 30 years or more. But when retirement is five years away or less, you have a more realistic set of numbers to work with. You know how much…

AT A TIME WHEN THE COST OF everything from gas to Netflix is rising, there’s a good chance that one of your expenses will decline: your state tax bill. Awash in budget surpluses, lawmakers are cutting taxes on everything from income to groceries, and the trend isn’t limited to red states. Several Democratic governors, including New York Gov. Kathy Hochul and Illinois Gov. J.B. Pritzker, have supported broad tax cuts for state residents. “If your state isn’t cutting taxes this year, it’s in the minority,” says Katherine Loughead, senior policy analyst for the Tax Foundation, a tax research organization. Some of the tax cuts are temporary, while others could permanently lower residents’ tax bills. For example, Mississippi enacted legislation that will lower the state’s top income tax rate from 5% to 4%…

Matthew Lewis is a professor in the John E. Walker Department of Economics at Clemson University and a gas price expert. What factors have contributed to the sharp rise in gas prices? An increase in crude oil prices is the main reason. To a secondary extent, disruptions to the refinery market and pipeline distribution system can affect prices, but the most recent increase is primarily driven by fluctuation in oil prices. Much of the initial shock this spring had to do with all the reshuffling that had to happen as refiners looked to get oil from different places after economic sanctions triggered by the war in Ukraine led to a disruption of oil from Russia. When crude oil prices rise, gas prices tend to increase quickly, but they fall much more slowly when…

MANY CONSUMERS WHO HAVE PAST medical debts weighing on their credit reports will get relief this summer. Starting July 1, the major credit bureaus—Equifax, Experian and TransUnion—will no longer include paid-off medical-debt collection accounts on credit reports. The bureaus will also extend the period before unpaid medical collections appear on credit reports from six months to one year, allowing additional time for patients to resolve issues with insurers or care providers. And in the first half of 2023, the bureaus will stop including medical-collection debts of less than $500 on credit files. Nearly 70% of medical-debt collections will vanish from credit reports because of these measures, according to the bureaus. In announcing the changes, the bureaus cited a Kaiser Family Foundation study that found two-thirds of medical debts result from a one-time…

MONDAY, JULY 4 Despite rising fuel prices, millions of Americans are expected to travel for the long holiday weekend. For advice on how to save on gas and get bargains on hotel rooms, check out “Deals, Deals, Deals,” on page 64. THURSDAY, JULY 14 Start the weekend early by celebrating Bastille Day, or as the French say faire le pont (make a bridge to a four-day weekend). More than 50 U.S. cities host Bastille Day celebrations, so check your favorite wine bar or bistro for specials. SUNDAY, JULY 17 National Ice Cream Day is a great time to get discounts on your favorite frozen desserts. To celebrate, parlors and brands across the country are serving up deals and freebies on ice cream. Look for deals from delivery services such as InstaCart and GoPuff, too. MONDAY, JULY…