Whether Your Social Security Is Taxed Depends on Your Other Income

Social Security itself is never taxed by the federal government unless you have other income above certain thresholds. The IRS uses a formula called combined income to decide whether you owe tax on your benefits. Combined income is your adjusted gross income plus nontaxable interest plus half of your Social Security benefits for the year.

If your combined income stays below the first threshold, you pay no federal tax on your Social Security. If it exceeds that threshold, you may owe tax on up to 50 percent or 85 percent of your benefits, depending on how much your combined income is. The thresholds have not changed since 1984, so more people hit them each year as wages and investment income rise.

Some states also tax Social Security benefits, though most do not. The states that do tax it are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont — and even in those states, you may not owe tax if your income is low enough.

Key Takeaways

  • You owe federal tax on Social Security only if your combined income (adjusted gross income plus nontaxable interest plus half your benefits) exceeds $25,000 for single filers or $32,000 for married couples filing jointly.
  • If you cross the first threshold, you may owe tax on up to 50 percent of your benefits; if you cross the second threshold, you may owe tax on up to 85 percent.
  • The thresholds have remained the same since 1984, meaning they do not adjust for inflation.
  • Eleven states tax Social Security benefits under their own rules, separate from federal tax.

The Two Federal Tax Thresholds and How They Work

The IRS has two thresholds for single filers. The first is $25,000 of combined income. If your combined income is between $25,000 and $34,000, you may owe tax on up to 50 percent of your benefits. If your combined income exceeds $34,000, you may owe tax on up to 85 percent of your benefits.

For married couples filing jointly, the first threshold is $32,000 and the second is $44,000. The math is the same — between the thresholds, up to 50 percent of benefits are taxable; above the second threshold, up to 85 percent are taxable.

The word "may" matters here. The actual amount of tax you owe depends on the exact calculation, which the IRS Worksheet in Publication 915 walks through. You do not automatically owe tax on the full percentage; the formula can result in a lower amount. Many people find it easier to use tax software or a tax preparer to run the numbers.

What Counts as Combined Income

Combined income is not the same as your total income. It includes your adjusted gross income (wages, self-employment income, pensions, taxable interest, taxable dividends, capital gains, and other sources) plus nontaxable interest (usually from municipal bonds) plus half of your Social Security benefits.

Notably, combined income does not include certain items. Supplemental Security Income (SSI) does not count. Veterans benefits do not count. Roth IRA conversions do not count toward combined income, though they do count as income for other purposes. Withdrawals from a Roth IRA do not count either.

If you have a large capital gain in one year, or you withdraw money from a traditional IRA, or you have significant rental income, those all push your combined income higher and may trigger taxation of your benefits. This is why some people who retired with modest Social Security find themselves owing tax once they start taking retirement account withdrawals.

How to Calculate the Tax You Owe

The IRS provides a worksheet in Publication 915 that walks through the calculation step by step. You start by adding your adjusted gross income, nontaxable interest, and half your Social Security benefits. Then you subtract the first threshold that applies to your filing status. The result tells you how much of your benefits may be taxable.

The next step involves a second calculation to see whether you hit the second threshold. If you do, a different formula applies that can make up to 85 percent of your benefits taxable. The two calculations run in sequence, and you use the higher of the two results.

Most people use tax software (TurboTax, H&R Block, TaxAct) or a tax preparer to handle this, because the worksheet is detailed and straightforward to make mistakes on. If you do it yourself, Publication 915 includes examples that show the math for different scenarios.

State Taxes on Social Security

Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont all tax Social Security benefits under state law. The rules vary by state — some use the same federal thresholds, some use different ones, and some have income limits that exempt lower-income retirees.

Colorado, Kansas, and New Mexico have phased out their taxes on Social Security, meaning they no longer tax it for new retirees or have eliminated it entirely. If you live in one of the remaining states, check your state tax form or contact your state revenue department to see whether you owe state tax on your benefits.

If you moved to a new state after you started receiving Social Security, you may owe tax to your current state of residence, not the state where you were living when you began benefits. State tax rules are separate from federal rules, so you may owe federal tax, state tax, both, or neither depending on your income and where you live.

What Happens If You Work While Receiving Social Security

If you are under your full retirement age and you work, Social Security reduces your benefits by $1 for every $2 you earn above an annual limit. For 2024, that limit is $23,400, though it changes each year. In the year you reach full retirement age, the reduction is $1 for every $3 you earn above a different limit, and it only applies to earnings before the month you reach full retirement age.

Once you reach full retirement age, you can earn as much as you want with no reduction to your benefits. The earnings themselves may push your combined income higher and trigger taxation of your benefits, but your benefit amount will not be reduced.

This is separate from the tax calculation. Your benefit amount may be reduced by the earnings test, and separately, your combined income may be high enough that you owe tax on your benefits. Both can happen in the same year.

How to Report Social Security on Your Tax Return

You receive a Form SSA-1099 from Social Security each January showing the total benefits you received in the previous year. You use this form to fill out your tax return. The amount on the SSA-1099 goes on your Form 1040, and then you use Publication 915 or tax software to determine whether any of it is taxable.

If none of your benefits are taxable, you still report the full amount on your return — you just do not include any of it in your taxable income. If some or all of your benefits are taxable, you report the taxable portion on line 5b of Form 1040.

If you did not receive an SSA-1099 by early February, contact Social Security to request a replacement. You need the form to file your return accurately, even if you think you do not owe tax on your benefits.

Frequently Asked Questions

Can I reduce my combined income to avoid owing tax on Social Security?

You can reduce your combined income by managing when you take retirement account withdrawals, when you realize capital gains, and when you claim certain deductions. However, the thresholds are low enough that many people with modest retirement income still hit them. A tax preparer can help you plan withdrawals to minimize tax, but there is no way to completely avoid taxation if your income is above the threshold.

What if I made a mistake on my Social Security tax in a previous year?

You can file an amended return using Form 1040-X for any year within three years of the original due date. If you owe additional tax, you will owe interest and possibly penalties. If you overpaid, you can request a refund. A tax preparer or the IRS can help you determine whether an amendment is worth filing.

Does Medicare premium tax count toward combined income?

No. The Medicare premiums you pay are deducted from your Social Security check, but they do not reduce your combined income for the purpose of calculating whether your benefits are taxable. Your combined income is based on your actual income, not what you receive after deductions.

If I am married and file separately, what threshold applies?

If you are married and file separately, the threshold is $0 — meaning if you have any combined income at all, some of your Social Security may be taxable. This is why married couples almost always file jointly when one or both receive Social Security.

Do I have to pay estimated tax on my Social Security if some of it is taxable?

You can request that the IRS withhold federal income tax from your Social Security check using Form W-4V. This is often easier than making estimated tax payments. You can adjust the withholding amount at any time by submitting a new Form W-4V to Social Security.