Whether your Social Security is taxed depends on your other income

Social Security benefits may be taxable income on your federal tax return, but only if your total income exceeds a certain threshold. The IRS uses a formula called combined income to decide how much of your benefit counts as taxable. Combined income is your adjusted gross income plus nontaxable interest plus half of your Social Security benefits.

If your combined income stays below the threshold for your filing status, you pay no federal tax on your benefits. If it exceeds the threshold, you may owe tax on up to 85 percent of your benefits. The thresholds have not changed since 1984, so more people cross them each year as wages and other income rise.

State taxes are separate. Some states do not tax Social Security at all. Others tax it the same way the federal government does, and a few have their own rules. Check your state's tax authority website to learn what applies where you live.

Key Takeaways

  • Combined income — your adjusted gross income plus half your Social Security benefits — determines whether benefits are taxable.
  • Federal thresholds are $25,000 for single filers and $32,000 for married couples filing jointly; income above these amounts may trigger taxation on up to 85 percent of benefits.
  • State tax treatment of Social Security varies widely, from no tax at all to taxation matching federal rules.
  • You can request that the Social Security Administration withhold federal income tax from your monthly benefit to avoid a tax bill at filing time.

The combined income thresholds that trigger taxation

The IRS sets two thresholds based on your filing status. For single filers, the first threshold is $25,000. If your combined income is between $25,000 and $34,000, up to 50 percent of your benefits may be taxable. If it exceeds $34,000, up to 85 percent may be taxable.

For married couples filing jointly, the first threshold is $32,000, and the second is $44,000. The same 50 percent and 85 percent rules explore at each level. If you are married but file separately, the thresholds are much lower — usually $0 — which means nearly all of your benefits would be taxable.

These thresholds have remained unchanged since 1984. Because wages and investment income have grown since then, more beneficiaries now fall into the taxable range each year, even though the dollar amounts sound high.

How to calculate the taxable portion of your benefits

The calculation has two steps. First, add your adjusted gross income, nontaxable interest, and half your Social Security benefits. This is your combined income.

Next, compare your combined income to the thresholds for your filing status. If you are single and your combined income is $28,000, you are $3,000 over the first threshold of $25,000. You take the smaller of two amounts: either half the excess over the threshold ($1,500) or half your total benefits. Whichever is smaller becomes the taxable amount under the first tier.

If your combined income exceeds the second threshold, the calculation includes a second tier. The IRS worksheet in Publication 915 walks through both steps. Most tax software calculates this automatically if you enter your Social Security benefit amount from your SSA-1099 form.

Types of income that count toward the combined income threshold

Combined income includes wages, self-employment income, interest, dividends, capital gains, and distributions from retirement accounts like IRAs and 401(k)s. It also includes rental income, pension income, and annuity payments.

Some income does not count. Tax-exempt interest — such as interest from municipal bonds — does count toward combined income even though it is not taxable. Conversely, Supplemental Security Income (SSI) does not count. Neither do Veteran's benefits, workers' compensation, or certain other payments.

If you are working while receiving benefits, your wages push your combined income higher and may trigger taxation. If you withdraw money from a traditional IRA, that withdrawal counts in full. Roth IRA withdrawals of contributions (not earnings) do not count, but Roth conversions do.

Withholding taxes directly from your Social Security check

You can ask the Social Security Administration to withhold federal income tax from your monthly benefit. This prevents a large tax bill when you file your return. You request withholding by completing Form W-4V and submitting it to your local Social Security office or mailing it to the address on the form.

On Form W-4V, you choose a withholding rate: 7 percent, 10 percent, 15 percent, or 25 percent of your benefit. You can change your withholding rate at any time by submitting a new form. The IRS does not withhold automatically — you must request it.

Withholding is optional. Some people prefer to withhold and avoid a bill at tax time. Others prefer to pay when they file, especially if they expect a refund. If you have other income sources that already withhold taxes, you may not need to withhold from Social Security.

State taxation of Social Security benefits

Thirteen states do not tax Social Security benefits at all: Alaska, Florida, Illinois, Iowa, Kansas, Louisiana, Maine, Mississippi, Missouri, Nevada, South Dakota, Tennessee, and Wyoming. If you live in one of these states, your benefits are not subject to state income tax regardless of your income level.

Most other states follow the federal rule: they tax Social Security the same way the IRS does, using combined income thresholds. A few states have different rules. Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont tax benefits but offer partial or full exemptions based on age or income level. The details vary by state.

If you move to a new state after you start receiving benefits, check that state's tax rules. Some states exempt residents over a certain age (often 55 or 65) from Social Security taxation even if they tax it for younger recipients.

Planning strategies to reduce taxable benefits

Because combined income determines taxation, reducing other income can lower the amount of benefits subject to tax. This is most relevant for people recently retired who have choices about when to withdraw from retirement accounts or when to claim other income.

Delaying withdrawals from traditional IRAs until after you reach age 73 (when required minimum distributions begin) can keep combined income lower in earlier retirement years. Converting a traditional IRA to a Roth IRA does increase combined income in the year of conversion, but future Roth withdrawals do not count, which may reduce taxation of benefits in later years.

If you are still working, earning less in a given year reduces combined income. Some people reduce work hours or take unpaid leave in the year they claim Social Security to stay below a threshold. These strategies depend on your individual situation and should be discussed with a tax professional.

Frequently Asked Questions

Do I have to pay federal tax on all my Social Security benefits?

No. If your combined income is below the threshold for your filing status, none of your benefits are taxable. If your combined income exceeds the threshold, only up to 50 percent of benefits are taxable in the first tier, and up to 85 percent in the second tier. No more than 85 percent of your total benefits can ever be taxed, even if your income is very high.

What is the difference between combined income and adjusted gross income?

Adjusted gross income (AGI) is what appears on your tax return after deductions like educator expenses or student loan interest. Combined income adds back nontaxable interest and half your Social Security benefits to your AGI. This combined figure is what the IRS uses to determine whether your benefits are taxable.

If I have not worked and receive only Social Security, do I owe taxes?

Probably not. If Social Security is your only income, your combined income equals half your benefits. For most people, this stays below the threshold. However, if you have nontaxable interest or other income sources, combined income could exceed the threshold even without wages.

Can I change how much tax is withheld from my benefits?

Yes. Submit a new Form W-4V to your local Social Security office or mail it to the address on the form. You can increase or decrease your withholding rate, or stop withholding altogether. Changes usually take effect within one or two months.

What happens if I do not withhold taxes and owe money at tax time?

You report the taxable portion of your benefits on your tax return and pay any tax owed by the filing important date. If you expect to owe a large amount, you can make estimated tax payments throughout the year, or you can request withholding from your benefit to spread the tax across the year.