Inflation relief checks, Student loan forgiveness, 401k limit increases & SSA payment | Summary news 23 October
Headlines: 23 October 2022
- Does my state offer inflation relief checks?
- Court temporarily blocks Biden's student loan forgiveness plan
- Key dates for the Middle Class Tax Refund in California
- COLA increase could provide $1,752 boost to Social Security recipients
- IRS publishes new tax brackets and standard deductionfor seniors for 2023
- A record number of taxpayers requested an extension this year
- California to offer gasoline relief as residents pay $2.00 more per gallon compared to other states
- States move to count the amount forgiven in student loans as taxable income
Related news:
Why has the student loan forgiveness plan been blocked?
The Democrats had hoped to build some momentum ahead of the midterms with President Biden's sweeping student loan forgiveness plan, but the proposals have been temporarily blocked by a federal appeals court. Just hours after Biden announced that more than 22 million borrowers had signed up for the relief, a court ruled in favour of six Republican-led states looking to block the measure.
Their intervention is unlikely to be anything more than a delay in the process, but it will be a concern for Biden if the matter drags on.
Should I have received my California inflation relief check?
Back in July California Gov. Gavin Newsom unveiled his $12 billion relief effort, known as the Middle Class Tax Refund. Newsom said the program is designed to "get dollars back into the pockets of millions of Californians grappling with global inflation and rising prices."
The distribution process began earlier this month and a recent report from the California Franchise Tax Board (CFTB) showed that more than 3.5 million resident have already received their inflation relief check.
However the are still millions more payments to be made and the payment schedule with continue into January 2023. For more information of when to expect your payment, check out the inflation relief check key dates.
What are the new 401k retirement contribution limits?
One of the most popular retirement plans in the United States is the 401(k) plan, which can offer upfront tax benefits or tax-free distributions when you retire. Each year there are limits to the amount of contribution an individual can make, and it has risen considerably as a result of the sustained high inflation.
Named after a section of the US Internal Revenue Code, a 401(k) is a retirement savings and investing plan offered by many American employers. Contributions are automatically taken out of a worker’s paycheck and invested in funds selected by the employee from a list given to them by the plan administrator.
Check out out guide to the 2023 IRS Retirement Contribution Limits
Wondering how much you could wipe off your student loan debt as a result of President Biden's forgiveness plan? For more than 90% of borrowers the program will provide $10,000 of debt relief and many will receive an additional $10,000.
We take a look at how the student loan forgiveness plan could wipe hundreds of dollars off your monthly repayments...
How many people can get student loan forgiveness?
A federal appeals court's decision to temporarily block the enactment of the student loan forgiveness plan may have blunted President Biden's momentum, but he is still determined to pass widespread debt relief for borrowers.
More than 43 million people in the United States currently have some outstanding student loan debt balance, and upwards of 90% of them are thought to qualify for the program. In a speech at Delaware University, Biden announced that more than 22 million borrowers had already applied to take advantage of the relief.
In terms of per capita numbers student debt makes for scary reading. In 2021 the mode average student loan debt per borrower was $39,351, which means an average monthly payment of $393, according to recent statistics from EducationData.org. The median debt is $17,000 and 56 percent of people owe less than $20,000.
In total 43.2 million people currently have a student loan and that number is only increasing each year. Worryingly, around 2.6 million graduates owe more than $100,000 in student loan debt alone.
/cloudfront-eu-central-1.images.arcpublishing.com/diarioas/UAN5RE5OPBFCXDKCJIUHQQMJWI.jpg)
The tax system in the United States operates at various different levels, known as tax brackets, to ensure that low earners pay a smaller proportion of their income. The theory is that groups with less disposable income should not be required to contribute as much.
The highest rate of income tax in the United States is 37%, and for 2023 that rate will only be applied to individuals earning more than $578,125 and joint filers who earn more than $693,750.
A change has also been made to the standard deduction, the amount of income that all filers are able to earn without paying tax on it. For everyone in the US, the first $13,850 ($27,700 for couples) will not be subject to income tax.
Inflation pushes up 401k contribution limits
Tens of millions of Americans pay into a tax-deferred retirement plan, alongside their employer, with most utilising a 401k plan. Each year there is a maximum amount that individuals can be required to contribute and with inflation continuing to run high the limits for 2023 will be raised substantially.
A statement from the IRS confirms: "The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased to $22,500, up from $20,500."
Axios reports that this 9.8% jump is the largest increase ever seen, both in terms of dollars and percentage rise.
As inflation in the United States has soared over the past 12 months, the Federal Reserve to take action to cool the economy and slow the rate of inflation that has caused chaos for consumers. The Fed has raised interest rates significantly to slow the pace of price increase, but that has had significant consequences for homeowners.
The average mortgage rates for Saturday, 22 October 2022 are as follows:
- 30-year fixed mortgage: 7.197%
- 20-year fixed mortgage: 7.020%
- 15-year fixed mortgage: 6.329%
- 10-year fixed mortgage: 6.542%
- 5-year adjustable rate mortgage: 6.111%
A United States appeals court has imposed a temporary block on the student loan forgiveness plan introduced by President Biden. The Eighth Circuit Court of Appeals issued a stay on the program while an appeal from six Republican-led states is considered.
Biden had promised to cancel billions of dollars in federal student loan debt but some Republican states had argued that the President had overstepped his authority by unilaterally declaring the measure without consent form Congress.
Which states have blocked student loan forgiveness?
President Biden's attempt to pass widespread student loan debt relief has been put on pause after an appeals court agreed to block the enactment of the White House plan. A group of six GOP-led states voiced their oppostion to the program and have launched a number of legal challenges.
The states leading the latest lawsuit are Arkansas, Kansas, Iowa, Missouri, Nebraska and South Carolina.
Republican Attorney General for Nebraska, Doug Peterson, said of Biden's student loan forgiveness initiative: “It’s very important that the legal issues involving presidential power be analysed by the court before transferring over $400 billion in debt to American taxpayers."
It has been two weeks since payments of California’s inflation relief checks were beginning to be sent out to residents.
Debit cardswill be issued to Californians based on the first letter of their last name, whether the received a GSS (Golden State Stimulus) I or II payment and those who changed their account information since filing their 2020 tax return. The tax authority advises allowing up to 2 weeks from the issue date for the debit card to arrive by mail.
Changes to retirement plans
Named after a section of the US Internal Revenue Code, a 401(k) is a retirement savings and investing plan offered by many American employers. Contributions are automatically taken out of a worker’s paycheck and invested in funds selected by the employee from a list given to them by the plan administrator.
Each year contribution limits are changed to reflect inflation. Starting next year, Americans can contribute up to $22,500 into 401(k), 403(b) and most 457 plans, $2,000 more than the current $20,500 contribution limit
To prevent tax evasion, the Internal Revenue Service (IRS) puts a cap on the amount of money that can be contributed to a 401(k) each year. Announced on Friday, the IRS will increase the contribution limit by $2,000 to $22,500 for 2023.
High inflation eating into worker wages
In July prices increased on average 1.3 percent across good markets, leading a 9.1 year-over-year surge in prices.
Inflation is expected to fall back to around 5.2 percent by the end of the year.
This will be accomplished by pumping interest rates.
Welcome to our inflation relief check live check
Good morning and welcome to AS USA! We will be bringing you the latest financial news and information from the United States on the one-off payments, student loan forgiveness and Social Security benefits.