Whether you pay tax on Social Security depends on your total income, not just what you get from Social Security

The federal government taxes some Social Security income for most people, but not all of it. The amount you owe depends on your combined income — that includes your Social Security benefit, wages, interest, dividends, and other money you receive. If your combined income stays below a certain threshold, you pay no federal tax on Social Security at all. If it goes above that threshold, you may owe tax on up to 85 percent of your benefit.

The threshold is the same for everyone: $25,000 for a single filer, $32,000 for married couples filing jointly. These numbers have not changed since 1984. Your state may also tax Social Security income, though most states do not.

Key Takeaways

  • You only pay federal tax on Social Security if your combined income (Social Security plus all other income) exceeds $25,000 for single filers or $32,000 for married couples filing jointly.
  • Combined income includes wages, self-employment income, interest, dividends, pensions, and half of your Social Security benefit itself.
  • If you exceed the threshold, you may owe tax on up to 50 percent or 85 percent of your Social Security benefit, depending on how far over you are.
  • Most states do not tax Social Security income, but a handful do — check your state's tax rules or ask a tax preparer.

How to calculate your combined income

The IRS uses a specific formula. Start with your adjusted gross income (AGI) — the number on line 11 of Form 1040. Add any tax-exempt interest you earned (usually from municipal bonds). Then add half of your Social Security benefit. That total is your combined income.

Example: You receive $20,000 in Social Security and $15,000 in pension income. Your AGI is $15,000. Half your Social Security is $10,000. Combined income is $15,000 + $10,000 = $25,000. You are exactly at the threshold, so you owe no federal tax on Social Security.

Another example: You receive $20,000 in Social Security and $20,000 in wages. Your AGI is $20,000. Half your Social Security is $10,000. Combined income is $20,000 + $10,000 = $30,000. You are $5,000 over the $25,000 threshold. You may owe tax on up to 50 percent of your benefit.

The two-tier tax calculation

Once you know your combined income, the IRS applies a two-step test. The first tier catches people just over the threshold. The second tier catches people much further over.

First tier: If your combined income is between $25,000 and $34,000 (single) or $32,000 and $44,000 (married filing jointly), you may owe tax on up to 50 percent of your Social Security benefit. The exact amount depends on how far over the threshold you are.

Second tier: If your combined income exceeds $34,000 (single) or $44,000 (married filing jointly), you may owe tax on up to 85 percent of your Social Security benefit. Again, the exact amount depends on your specific income.

The IRS publishes a worksheet in the instructions to Form 1040 that walks through the calculation step by step. A tax preparer can also do this for you. Many people find the worksheet confusing, so paying for one hour of tax help often costs less than the time spent figuring it out yourself.

What counts as income for this calculation

Combined income includes almost everything you receive money from, with a few exceptions. Wages, self-employment income, pensions, annuities, interest, dividends, capital gains, and rental income all count. Distributions from retirement accounts (401(k), IRA, SEP-IRA) count as income in the year you withdraw them.

A few things do not count: Supplemental Security Income (SSI) does not count. Veterans benefits do not count. Gifts do not count. The return of your own principal from an investment does not count — only the earnings do.

Tax-exempt interest (usually from municipal bonds) does not reduce your tax bill, but it does count toward your combined income for the purpose of deciding whether you owe tax on Social Security. This catches many retirees by surprise.

State taxes on Social Security

Most states do not tax Social Security income at all. A small number do: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont tax some or all Social Security benefits under certain conditions.

The rules vary widely. Some states tax only the portion the federal government taxes. Others have their own income thresholds. A few tax Social Security the same way they tax other income. If you live in one of these states, contact your state tax authority or a local tax preparer to find out what you owe.

How to reduce the tax you owe

If your combined income is close to the threshold, a few moves can lower it. Withdrawing money from a traditional IRA counts as income in the year you withdraw it, so timing matters — if you can delay an IRA withdrawal to a year when your other income is lower, you may cross below the threshold. Roth IRA withdrawals do not count as income, so converting a traditional IRA to a Roth in a low-income year can help long-term, though it raises your income in the conversion year.

If you are still working and receiving Social Security before full retirement age, the Social Security Administration reduces your benefit by $1 for every $2 you earn above $23,400 (in 2024; this amount changes yearly). This is not a tax, but it does reduce the benefit you receive. Once you reach full retirement age, there is no earnings limit.

Tax-deductible expenses — charitable donations, medical expenses above a threshold, property taxes — reduce your AGI and therefore your combined income. Bunching deductions into one year (if you itemize rather than take the standard deduction) can sometimes push you below the threshold.

Filing requirements and withholding

You must file a federal tax return if your combined income exceeds the threshold for your filing status. Even if you do not owe tax, filing may be worth it — you might be due a refund if taxes were withheld from your benefit.

The Social Security Administration does not automatically withhold federal income tax from your benefit. You can request withholding by filling out Form W-4V and sending it to your local Social Security office, or you can make estimated quarterly tax payments to the IRS. Many people choose to have tax withheld so they do not owe a large bill at tax time.

If you did not request withholding and you owe tax, you can still file a return and pay what you owe. The IRS does not charge a penalty for underpayment if you pay by the tax deadline, though interest accrues on any unpaid balance.

Frequently Asked Questions

Do I have to file a tax return if I only have Social Security income?

Only if your combined income exceeds the threshold ($25,000 single, $32,000 married filing jointly). If Social Security is your only income and it is below that amount, you do not have to file. However, filing may get you a refund if taxes were withheld from your benefit.

What if I have a pension and Social Security — do I pay tax on both?

You pay tax on your pension under normal income tax rules. You pay tax on Social Security only if your combined income (pension plus half your Social Security) exceeds the threshold. The two are taxed differently, so you cannot avoid Social Security tax by having pension income instead.

Can I avoid the tax by taking my Social Security later?

Delaying Social Security increases your monthly benefit, which increases the amount of income you have in future years. Whether this helps depends on your other income sources. If you have wages or pension income that will not change, delaying Social Security may not reduce your tax burden — it may just shift it to a later year.

Does Medicare premium withholding count as income?

No. Medicare premiums are deducted from your Social Security benefit, but they do not count as income for tax purposes. Your combined income is based on the benefit amount before Medicare is deducted.

What if I disagree with the tax calculation on my Social Security statement?

Contact the IRS or a tax preparer to review your return. The Social Security Administration sends you a statement (Form SSA-1099) showing the benefit you received; the IRS uses that to calculate your tax. If the amount on the form is wrong, contact Social Security to correct it.