Whether your Social Security is taxed depends on your other income

Social Security income may or may not be taxed in a given year. The Internal Revenue Service uses a formula based on your combined income — not just your Social Security benefit alone. If your combined income stays below a certain threshold, you owe no federal tax on your benefits. If it rises above that threshold, between 0% and 85% of your benefits become taxable.

Combined income means your adjusted gross income plus nontaxable interest plus half 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 benefits rise.

State tax treatment varies widely. Some states tax Social Security; most do not. If you live in a state that does tax it, you will need to file a state return even if you owe nothing to the federal government.

Key Takeaways

  • Your Social Security becomes taxable only if your combined income (wages, pensions, interest, plus half your benefits) exceeds $25,000 for single filers or $32,000 for married couples filing jointly.
  • If you cross the threshold, the IRS taxes either 50% or 85% of your benefits depending on how far above the threshold you go, not 100% of the excess.
  • Thirteen states currently tax Social Security income: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia; the others do not.
  • The federal thresholds have remained unchanged since 1984, meaning more retirees are affected each year as incomes rise.

How the IRS calculates taxable Social Security

The IRS uses a two-tier system. If your combined income is below the first threshold ($25,000 single / $32,000 married filing jointly), none of your benefits are taxable. If it exceeds the first threshold but stays below the second ($34,000 single / $44,000 married filing jointly), up to 50% of your benefits become taxable. If it exceeds the second threshold, up to 85% becomes taxable.

The actual amount taxed is not a simple percentage of your total benefit. Instead, the IRS calculates it in steps. For income between the first and second threshold, you pay tax on the lesser of: (1) 50% of your benefits, or (2) 50% of the amount by which your combined income exceeds the first threshold. Above the second threshold, the calculation adds another layer. This means you will never pay tax on more than 85% of your benefits, even if your income is very high.

You must file a federal tax return if your combined income exceeds the first threshold, even if no tax is ultimately owed. The IRS does not automatically know your Social Security income; you report it on Form 1040 or 1040-SR.

Which states tax Social Security benefits

Thirteen states currently tax Social Security income: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. The remaining 37 states and Washington, D.C., do not tax it.

State tax rates and thresholds differ from federal rules. Colorado, for example, taxes Social Security the same way the federal government does but allows an exemption for residents over 55. Connecticut taxes it only for higher-income residents. Kansas and Missouri exempt it entirely for residents over a certain age. If you live in one of these states, you will need to understand both the federal and state rules that apply to you.

If you moved to a new state after you started receiving benefits, check the tax rules in your current state of residence. Some states changed their Social Security tax laws in recent years, so rules that applied when you moved may no longer be current.

Planning to reduce taxable Social Security

Because the threshold is based on combined income, reducing other income sources can lower the amount of your benefits that are taxed. Common strategies include timing when you withdraw from retirement accounts, managing investment income, and deferring certain types of income to years when your combined income is lower.

If you are still working and receiving Social Security before your full retirement age, the Social Security Administration also reduces your benefit by $1 for every $2 you earn above an annual limit (the limit changes yearly). This is separate from income tax but affects how much you receive each month. Once you reach full retirement age, this earnings limit no longer applies.

Some people coordinate when they claim Social Security with when they take distributions from IRAs, 401(k)s, or other retirement savings. A financial advisor or tax professional can model different scenarios for your specific situation, though this guide cannot recommend a particular strategy.

What counts toward combined income

Combined income includes wages, self-employment income, interest, dividends, capital gains, and distributions from retirement accounts. It also includes nontaxable interest from municipal bonds — a detail many people miss. Roth IRA withdrawals of contributions (not earnings) do not count, but Roth conversions do count as income in the year of conversion.

Certain income does not count: Supplemental Security Income (SSI), veterans benefits, workers' compensation, and some other need-based benefits are excluded. If you receive any of these, they do not push you over the threshold.

The half of your Social Security benefit that you add to the calculation is not actually taxed; it is only used to determine whether any of your benefits are taxable. This can be confusing, but it means your combined income figure is often higher than your actual take-home income.

Reporting Social Security on your tax return

The Social Security Administration sends you a Form SSA-1099 each January showing the total benefits you received in the prior year. You report this amount on Form 1040 or 1040-SR. If you are married filing jointly, both spouses' benefits go on the same return, and the combined income calculation includes both.

If you received benefits for only part of the year — because you started or stopped receiving them — the SSA-1099 will show only what you actually received. You still use the same thresholds to determine if any of it is taxable.

If you made a mistake on a prior year's return or did not file when you should have, you can file an amended return using Form 1040-X. The IRS generally has a three-year window to assess tax, but filing sooner rather than later is better if you owe money.

Frequently Asked Questions

Can I avoid taxes on Social Security by not filing a return?

No. If your combined income exceeds the threshold, you must file a federal return even if no tax is ultimately owed. The IRS matches Social Security income reported by the SSA to tax returns, and not filing when required can result in penalties and interest.

Does Medicare premium surcharge count as a tax on Social Security?

Medicare premiums and income-related monthly adjustment amounts (IRMAA) are separate from income tax. Your combined income determines both your taxable Social Security and your Medicare costs, but they are calculated differently. You can owe IRMAA even if your Social Security is not taxable.

What if I worked outside the United States and have foreign income?

Foreign earned income and foreign investment income generally count toward combined income for Social Security tax purposes, with some exceptions for specific types of foreign income. If you have substantial foreign income, consult a tax professional familiar with expatriate taxation.

Do I have to pay estimated taxes on Social Security?

If you expect to owe tax on your Social Security, you can have the IRS withhold it directly from your benefit check. You request this on Form W-4V, which you submit to the Social Security Administration. Alternatively, you can make quarterly estimated tax payments if you prefer.

If I delay claiming Social Security, will less of it be taxable?

Delaying does not change the tax rules — the same thresholds and percentages apply regardless of when you claim. However, a higher monthly benefit (which you receive by waiting) combined with the same other income might push you into a higher tax bracket or increase the percentage of benefits that are taxable.