You may have to pay federal income tax on your Social Security benefits, depending on your total income and filing status
Not everyone pays taxes on Social Security. The Internal Revenue Service (IRS) uses a formula based on your combined income — which includes wages, interest, dividends, and half of your Social Security benefits — to determine whether any of your benefits are taxable. If your combined income falls below a certain threshold, you owe nothing. If it exceeds the threshold, you may owe tax on up to 85 percent of your benefits.
The thresholds depend on your filing status and have not changed since 1984. For 2024, a single filer with combined income over $25,000 may owe tax on benefits. For married couples filing jointly, the threshold is $32,000. These amounts do not adjust for inflation, which means more people cross the threshold each year as their income grows.
State taxes are separate. Some states do not tax Social Security at all. Others tax it the same way the federal government does, or explore their own rules. You need to check your state's rules separately.
Key Takeaways
- The IRS taxes Social Security based on your combined income (wages plus half your benefits), not on the benefits alone.
- If you are single and your combined income exceeds $25,000, or married filing jointly and it exceeds $32,000, some of your benefits may be taxable.
- You can owe tax on up to 85 percent of your benefits, depending on how far your income exceeds the threshold.
- State tax rules vary — some states do not tax Social Security, while others do, so you must check your state's rules.
- The IRS does not automatically withhold taxes from Social Security payments, so you may need to pay estimated tax or request withholding.
How the IRS calculates which benefits are taxable
The calculation starts with your combined income. Add your adjusted gross income (AGI), plus any tax-exempt interest you earned, plus half of your Social Security benefits. That total is your combined income.
Next, compare that number to your threshold. For single filers, the first threshold is $25,000. For married couples filing jointly, it is $32,000. For married people filing separately, it is $0 — meaning some benefits are almost always taxable.
If your combined income is below the threshold, you owe no federal tax on your benefits. If it exceeds the threshold, the amount above the threshold is subject to tax, but only up to 85 percent of your total benefits. The actual percentage taxed depends on how far above the threshold you are. Most people who owe tax on benefits owe tax on 50 percent of them, not 85 percent.
The IRS publishes a worksheet in the instructions to Form 1040 that walks through this calculation step by step. If your situation is complex — for example, if you have both wages and self-employment income — a tax professional can help you work through it.
Why half your benefits count toward income
When you worked, you and your employer each paid Social Security tax on your wages. The IRS treats the employer's share as income you received, even though it went directly to the Social Security Administration. That is why half your benefits count toward your combined income — it represents the employer portion.
This rule applies whether or not you actually owe tax on your benefits. Even if your combined income is below the threshold and you owe nothing, you still count half your benefits when calculating combined income.
What income counts toward the threshold
Combined income includes wages, self-employment income, interest, dividends, capital gains, rental income, and most other sources. It also includes tax-exempt interest from municipal bonds — even though that interest is not taxable, it still counts toward the Social Security threshold.
Combined income does not include Supplemental Security Income (SSI), which is a separate program for low-income individuals. It also does not include certain veterans' benefits or workers' compensation.
If you are still working while receiving Social Security, your wages count fully toward the threshold. There is no separate earnings limit that reduces your benefits — the earnings limit only applies if you have not yet reached full retirement age. Once you reach full retirement age, you can earn as much as you want without losing benefits, but that income still counts toward the tax threshold.
How to handle taxes if you owe them
The Social Security Administration does not automatically withhold federal income tax from your monthly benefit payment. If you expect to owe tax, you have two options: pay estimated tax quarterly, or request that the SSA withhold tax from your benefits.
To request withholding, fill out Form W-4V and send it to your local Social Security office. You can choose to have 7, 10, 12, or 22 percent of your benefit withheld. This is simpler than calculating and paying estimated tax yourself, and it ensures you do not underpay.
If you do not request withholding and do not pay estimated tax, you may owe a penalty when you file your return. The penalty is small if you are close to the right amount, but it adds up if you significantly underpay.
State tax rules for Social Security
Thirteen states do not tax Social Security benefits at all: Alaska, Florida, Illinois, Iowa, Kansas, Louisiana, Maine, Mississippi, Missouri, Nevada, New Hampshire, South Dakota, Tennessee, and Wyoming. If you live in one of these states, you owe no state tax on your benefits.
Other states follow the federal rule — if your benefits are taxable under federal law, they are taxable under state law too. A few states have their own thresholds or rules that differ from federal law. Colorado, for example, excludes Social Security from state income tax for most retirees.
Check your state's tax authority website or ask a tax professional about your state's specific rules. State rules change, and some states have different rules depending on your age or income level.
What to do if you receive a notice from the IRS
If the IRS sends you a notice about Social Security tax, it means they believe you owe tax on your benefits based on the information they have. Read the notice carefully — it will explain what income they counted and how they calculated the tax.
If you disagree with the calculation, you can respond to the notice with documentation of your actual income. If you made an error on your return, you can file an amended return (Form 1040-X) to correct it. If the IRS made an error, you can explain that in your response to the notice.
If you cannot resolve it yourself, a tax professional or a low-income taxpayer clinic can help. Many communities have free tax clinics for people over 60.
Frequently Asked Questions
Can I reduce my Social Security tax by taking less income?
Yes, in some cases. If you have control over when you receive income — for example, if you are deciding whether to sell an investment or take a distribution from a retirement account — timing that income to stay below the threshold can reduce or eliminate your Social Security tax. Work with a tax professional to model different scenarios.
Does Medicare premium withholding count as income for Social Security tax purposes?
No. Medicare premiums are withheld from your Social Security payment, but they do not reduce your combined income for tax purposes. Your combined income is calculated before any withholding.
What if I worked outside the United States?
Foreign earned income is generally not subject to U.S. income tax if you meet certain conditions, but it still counts toward your combined income for Social Security tax purposes. This can push you over the threshold even if the foreign income itself is not taxable. Consult a tax professional if you have foreign income.
Do I have to file a tax return if my only income is Social Security?
Not necessarily. If Social Security is your only income and it is below the filing threshold for your age and filing status, you do not have to file. However, if you had taxes withheld or you are owed a refund, filing a return will get you that money back.
Can I request withholding on only part of my Social Security payment?
No. When you request withholding using Form W-4V, you choose a percentage (7, 10, 12, or 22 percent) that applies to your entire benefit. You cannot request withholding on only a portion of the payment.