Most people do not pay federal income tax on Social Security, but some do — it depends on your total income
Whether you owe federal income tax on your Social Security benefits depends on how much other income you have. The IRS uses a calculation called combined income to decide this. If your combined income stays below a certain threshold, you pay no tax on your benefits. If it goes above that threshold, you may owe tax on a portion of your benefits — but not all of them.
Combined income means your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. The thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. These thresholds have not changed since 1984, so more people cross them each year as wages and investment income rise.
Key Takeaways
- You calculate whether you owe tax using combined income, which includes half your Social Security benefits plus other income sources.
- Single filers with combined income under $25,000 and married filers under $32,000 typically owe no federal tax on benefits.
- If you cross the threshold, you may owe tax on up to 50 percent of your benefits, or up to 85 percent if your income is much higher.
- State taxes on Social Security vary widely — some states tax benefits, others do not, and some have their own income thresholds.
- You can request that Social Security withhold taxes from your monthly payment to avoid a large bill at tax time.
How the IRS calculates whether you owe tax
Start with your adjusted gross income (AGI) — the number from your tax return before you take the standard or itemized deduction. Add any nontaxable interest you earned, such as interest from municipal bonds. Then add half of your Social Security benefits for the year. That total is your combined income.
Compare your combined income to the IRS threshold for your filing status. If you are single and your combined income is $25,000 or less, you owe no federal tax on your benefits. If you are married filing jointly and your combined income is $32,000 or less, you owe no tax. If you are married filing separately, the threshold is zero — you will almost certainly owe tax if you received any benefits.
If your combined income exceeds the threshold, the IRS taxes either 50 percent or 85 percent of your benefits, depending on how far above the threshold you are. The calculation is complex, but the result is that you never pay tax on more than 85 percent of your benefits, and most people pay tax on far less.
Example: How combined income works in practice
Suppose you are single and received $20,000 in Social Security benefits last year. You also earned $10,000 from part-time work and had $3,000 in taxable interest. Your adjusted gross income is $13,000. Half your benefits is $10,000. Your combined income is $13,000 + $10,000 = $23,000. Since $23,000 is below the $25,000 threshold, you owe no federal tax on your benefits.
Now suppose you earned $15,000 instead of $10,000. Your combined income would be $28,000. You are $3,000 over the threshold. The IRS would tax up to 50 percent of your benefits on the amount over the threshold — in this case, up to $1,500 of your $20,000 in benefits. Your actual tax owed depends on your tax bracket, but you would report some of your benefits as income.
State taxes on Social Security benefits
Thirteen states tax Social Security benefits to some degree: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. The rules vary significantly by state. Some states use the same federal thresholds; others have their own. Some states tax benefits only for higher-income retirees; others tax them more broadly.
Colorado, Kansas, and Nebraska conform to federal taxation — if you owe federal tax on your benefits, you likely owe state tax too. Connecticut, Minnesota, Missouri, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia have their own rules and thresholds that differ from federal law. West Virginia, for instance, does not tax benefits for residents over 55.
If you live in or moved to one of these states, contact your state tax authority or a tax professional to understand your state's specific rules. The thresholds and percentages taxed are different from federal rules and change periodically.
How to request tax withholding on your benefits
If you expect to owe tax on your benefits, you can ask Social Security to withhold federal income tax from your monthly payment. This prevents a large bill when you file your return. You do this by completing Form W-4V (Voluntary Withholding Request) and submitting it to Social Security.
You can request withholding of 7 percent, 10 percent, 12 percent, or 22 percent of your monthly benefit. Social Security does not offer custom withholding amounts. You can change your withholding request at any time by submitting a new Form W-4V. If you want to stop withholding, submit a new form requesting zero withholding.
Withholding is voluntary and does not change how much tax you owe — it just spreads the payment across the year instead of requiring a lump sum at tax time. If you do not withhold and owe a large amount, you may owe estimated tax payments as well.
What counts as income for the combined income calculation
Combined income includes wages, self-employment income, taxable pensions, taxable annuities, capital gains, dividends, and taxable interest. It also includes income from rental property, royalties, and other sources. Nontaxable income like municipal bond interest counts too — that is why it is added separately in the combined income formula.
Some income does not count. Supplemental Security Income (SSI) does not count. Veterans benefits do not count. Gifts and inheritances do not count. Return of principal from investments does not count — only the gains do. If you are unsure whether a particular income source counts, ask a tax professional or contact the IRS.
Planning ahead if you have other income sources
If you work part-time, receive a pension, or have investment income, you may want to plan your income to stay below the combined income threshold. This is not always possible, but it is worth considering. For instance, if you are close to the threshold, you might delay taking a bonus, defer selling an investment, or time a large withdrawal from a retirement account.
Roth conversions and other retirement account moves can affect your combined income. If you are doing tax planning around Social Security, work with a tax professional or financial advisor who understands how these moves interact with the taxation of benefits. The math is straightforward once you know the threshold, but the planning can be complex.
Frequently Asked Questions
Do I have to file a tax return if my only income is Social Security?
No. If Social Security is your only income and you do not have other income that requires filing, you do not need to file a federal tax return. However, if you have other income sources, you may need to file even if you do not owe tax, because the IRS needs to know about all your income to calculate whether your benefits are taxable.
What if I worked and paid Social Security tax — do I get a refund?
No. Social Security tax and federal income tax are separate. Paying Social Security tax does not reduce your federal income tax bill or create a refund. The tax on your benefits is calculated based on your combined income, not on what you paid into the system.
Can I reduce my combined income by making charitable donations?
Only if you itemize deductions instead of taking the standard deduction. Charitable donations reduce your adjusted gross income only if you itemize. Many retirees take the standard deduction, which is simpler and often larger. If you itemize, charitable donations do reduce your AGI and therefore your combined income.
What if I did not withhold taxes and now owe a large amount?
You can pay the full amount when you file your return, or you can set up a payment plan with the IRS. If you owe more than $50,000, the IRS may require a payment plan. You may also owe penalties and interest if you did not pay estimated taxes during the year. A tax professional can help you understand your options.
Does the combined income threshold ever change?
The thresholds ($25,000 for single filers, $32,000 for married filing jointly) have been the same since 1984 and are not indexed for inflation. Congress would have to pass new legislation to change them. Because thresholds do not change but incomes do, more people are affected by taxation of benefits each year.