The thresholds beyond which first 50 percent and then 85 percent of your Social Security benefits are subject to federalincometaxation are explicitly NOT indexed for inflation.
This double taxation equals federal taxes of 45 cents on every dollar of taxable income paid as dividends (and total taxes of more than 53 cents in high tax states like New York).
To avoid double taxation, companies operating in states and paying state income taxes can reduce their federal tax obligation by the amount paid to the state (just as individuals can reduce their federalincome tax obligation by subtracting their state income tax payment from their income).