Whether your Social Security is taxed depends on your other income
Social Security benefits may be subject to federal income tax, but only if your total income exceeds a certain threshold. The IRS uses a formula based on your combined income — not just your benefits. Combined income includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. If you fall below the threshold, you owe nothing on your benefits. If you exceed it, you may owe tax on up to 85 percent of what you receive.
The thresholds have not changed since 1984 and do not adjust for inflation. This means more people pay tax on their benefits each year as their income grows. The IRS does not automatically withhold tax from Social Security payments, so you may need to arrange it yourself or make quarterly estimated payments.
Key Takeaways
- Combined income is calculated as your adjusted gross income plus nontaxable interest plus half your Social Security benefits — not your benefits alone.
- The tax thresholds are $25,000 for single filers and $32,000 for married couples filing jointly; these amounts have not changed since 1984.
- If your combined income exceeds the threshold, you may owe tax on 50 to 85 percent of your benefits, depending on how far over you go.
- The IRS does not withhold tax automatically, so you can request it on Form W-4V or make quarterly estimated tax payments using Form 1040-ES.
How the IRS calculates combined income
Combined income is not the same as your total income. The IRS starts with your adjusted gross income (AGI) — the number on line 11 of your Form 1040. Then it adds back any nontaxable interest you earned, such as interest from municipal bonds. Finally, it adds half of your Social Security benefits for the year.
Example: You receive $20,000 in Social Security benefits and have $15,000 in pension income. Your combined income is $15,000 (pension) plus $10,000 (half your benefits) = $25,000. If you are single, you are exactly at the threshold and owe no tax. If you had $16,000 in pension income instead, your combined income would be $26,000, and you would cross the threshold.
Income from part-time work, rental property, investment gains, and pensions all count toward combined income. Withdrawals from traditional IRAs and 401(k)s count as well. Withdrawals from Roth IRAs do not count, nor do withdrawals from accounts you funded with after-tax dollars.
The two tax thresholds and how much you owe
The IRS uses two thresholds. If your combined income stays below the first threshold, none of your benefits are taxed. If you exceed the first threshold but stay below the second, you may owe tax on up to 50 percent of your benefits. If you exceed the second threshold, you may owe tax on up to 85 percent of your benefits.
| Filing Status | First Threshold | Second Threshold |
|---|---|---|
| Single | $25,000 | $34,000 |
| Married filing jointly | $32,000 | $44,000 |
| Married filing separately | $0 | $0 |
The calculation is complex. Between the first and second threshold, you owe tax on the lesser of (a) 50 percent of the amount over the first threshold, or (b) 50 percent of your benefits. Above the second threshold, you owe tax on the lesser of (a) 85 percent of the amount over the second threshold plus the tax from the first bracket, or (b) 85 percent of your benefits. Most people use tax software or a tax professional to calculate this correctly.
Married couples filing separately face a harsh rule: if you lived with your spouse at any time during the year, your first threshold is $0 and your second is $0. This means up to 85 percent of your benefits are taxable regardless of income.
Requesting tax withholding from 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. Use Form W-4V, available on the Social Security Administration website or by calling 1-800-772-1213. You choose a flat dollar amount to withhold each month — for example, $50 or $100 — and Social Security deducts it before sending you your payment.
Withholding is voluntary and you can change it at any time. If you withhold too much, you get the overage back as a refund when you file your tax return. If you withhold too little, you may owe when you file. Many people use withholding as a rough estimate and adjust it year to year based on what they owed the previous year.
You can also make quarterly estimated tax payments directly to the IRS using Form 1040-ES. This route is more common if you have multiple sources of income and want to spread your tax liability across the year. Payments are due April 15, June 15, September 15, and January 15.
What happens if you do not withhold or pay estimated tax
If you owe tax on your benefits and do not withhold or pay estimated tax, you will owe the full amount when you file your return. The IRS may also charge you a penalty for underpayment of estimated tax if the amount owed is large enough. The penalty is calculated based on how much you underpaid and how late the payment was.
Filing your return on time is important even if you cannot pay the full amount. The IRS charges interest on unpaid tax, but the interest rate is lower if you file and request a payment plan than if you file late. You can set up a payment plan with the IRS for amounts under $25,000.
State income tax on Social Security
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 by state. Some states follow the federal formula; others use their own thresholds or tax a flat percentage of benefits.
If you live in one of these states, you will need to file a state return and calculate state tax separately from federal tax. Your state tax return instructions will explain the formula. Some states offer exemptions for people over a certain age or with income below a certain level, so check your state's revenue department website for details.
Frequently Asked Questions
Do I have to pay tax on my Social Security if I have no other income?
No. If Social Security is your only income, your combined income is half your benefits, which is below the first threshold for any filing status. You owe no federal tax on your benefits.
What counts as nontaxable interest?
Interest from municipal bonds and certain U.S. savings bonds counts as nontaxable interest for the combined income formula, even though you do not pay federal tax on it. Regular savings account interest and money market interest do not count because they are already taxable.
Can I reduce my combined income to avoid tax on my benefits?
You can reduce your adjusted gross income by contributing to a traditional IRA or 401(k), which lowers your combined income. Roth contributions do not help because Roth withdrawals do not count toward combined income in the first place. Consult a tax professional about whether this strategy makes sense for your situation.
If I work part-time, does my job income count toward the threshold?
Yes. Wages from part-time work are part of your adjusted gross income and count toward combined income. Self-employment income counts as well, though you can deduct half of your self-employment tax.
What if I did not withhold enough and owe a large amount?
File your return and pay what you can. You can request an installment agreement with the IRS for amounts under $25,000, which lets you pay in monthly installments. The IRS charges interest and a failure-to-pay penalty, but these are lower if you file on time and set up a plan than if you ignore the debt.