Whether your Social Security is taxed depends on your other income

Social Security retirement benefits are not automatically taxed, but they may be taxable if your total income exceeds certain thresholds set by the IRS. The IRS calls this your "combined income," which includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. If that combined total crosses the line for your filing status, you will owe federal income tax on a portion of your benefits — not all of them, just a portion.

The thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. These numbers have not changed since 1984, which means more people cross them each year as wages and benefits rise. Some states also tax Social Security benefits, though most do not.

Key Takeaways

  • You may owe federal tax on Social Security only if your combined income (wages, pensions, interest, plus half your benefits) exceeds $25,000 for single filers or $32,000 for married filing jointly.
  • If you cross the threshold, the IRS taxes up to 50 percent of your benefits, or up to 85 percent if your income is much higher — never 100 percent of what you receive.
  • The IRS uses a two-tier system: the first tier applies if you are slightly over the threshold, and the second tier applies if you are well over it.
  • You can reduce your tax bill by managing other income sources, such as delaying a pension, spacing out retirement account withdrawals, or converting traditional IRA funds strategically.
  • Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont tax Social Security benefits under certain conditions.

How the IRS calculates combined income

Combined income is not the same as your gross income. Start with your adjusted gross income (AGI) — the number at the bottom of your tax return before you claim the standard or itemized deduction. Then add any nontaxable interest you earned, such as interest from municipal bonds. Finally, add half of your Social Security benefits for the year.

That total is what the IRS uses to determine whether you owe tax on your benefits. A person with $20,000 in wages, $3,000 in nontaxable interest, and $12,000 in Social Security benefits would have a combined income of $20,000 + $3,000 + $6,000 (half the benefits) = $29,000. For a single filer, that exceeds the $25,000 threshold by $4,000.

The two-tier tax system for Social Security

If your combined income exceeds the threshold, the IRS does not tax all your benefits. Instead, it uses two tiers. In the first tier, you may owe tax on up to 50 percent of your benefits. In the second tier, you may owe tax on up to an additional 35 percent of your benefits, for a maximum of 85 percent.

The first tier applies if your combined income is between the threshold and $9,000 higher (for single filers) or $12,000 higher (for married filing jointly). The second tier applies if your combined income exceeds those upper limits. For example, a single filer with a combined income of $30,000 is $5,000 over the $25,000 threshold, so the first tier applies. A single filer with a combined income of $35,000 is $10,000 over, so both tiers apply and more of the benefits become taxable.

The actual calculation is complex, and the IRS provides a worksheet in Publication 915 to work through it. Many people use tax software or a tax professional to determine the exact amount.

State taxes on Social Security benefits

Eleven states tax Social Security benefits under certain conditions: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. Most of these states follow the federal thresholds or use their own income limits. A few states tax benefits only for high-income retirees or only for people who also receive a government pension.

If you live in one of these states, check your state tax return instructions or contact your state revenue department to learn whether your benefits are taxable under state law. The rules vary significantly from state to state, and some have exemptions or phase-outs that differ from federal rules.

Ways to reduce the tax on your benefits

If your combined income is close to the threshold, you may be able to lower it by managing when and how you receive other income. Delaying a pension payment, spacing out withdrawals from a traditional IRA across multiple years, or timing the sale of investments can all affect your combined income in a given year.

Converting a traditional IRA to a Roth IRA increases your taxable income in the year of conversion, which could push more of your Social Security benefits into the taxable range. However, in future years, Roth withdrawals do not count toward combined income, which may lower your tax bill over time. This strategy works best if you have several years before you need the money and can afford to pay the conversion tax from other sources.

Some people also reduce combined income by investing in municipal bonds, which produce nontaxable interest. However, half of your Social Security benefits still counts toward combined income even if all your other income is tax-free, so this approach has limits.

How to report 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 your federal tax return using Schedule 1 (Form 1040) and the Social Security Benefits Worksheet in Publication 915.

If you owe tax on your benefits, you can pay it when you file your return, or you can ask Social Security to withhold taxes from your monthly check. To request withholding, complete Form W-4V and send it to your local Social Security office. You can withhold 7, 10, 15, or 22 percent of your monthly benefit, or request a specific dollar amount.

What happens if you work while receiving benefits before full retirement age

If you claim Social Security before reaching your full retirement age and you continue to work, Social Security will reduce your monthly benefit by $1 for every $2 you earn above an annual limit. For 2024, that limit is $23,400, but it changes each year. This reduction is separate from income tax and applies only in years before you reach full retirement age.

Once you reach full retirement age, you can earn any amount without a reduction to your benefits. However, your earnings still count toward combined income for tax purposes, so they may increase the amount of your benefits that are taxable.

Frequently Asked Questions

Can I avoid taxes on Social Security by not claiming it?

No. If you receive Social Security benefits, you must report them on your tax return and pay tax on them if your combined income exceeds the threshold. You cannot avoid the tax by declining to claim the benefits or by not depositing the check.

Does Medicare premium withholding count toward combined income?

No. The amount you pay for Medicare Part B and Part D premiums is withheld from your Social Security check, but it does not reduce your combined income for tax purposes. Your combined income is calculated before Medicare withholding.

What if I receive both Social Security and a government pension?

Both count toward your combined income. If you also worked in a job not covered by Social Security (such as some government jobs), you may be subject to the Government Pension Offset or Windfall Elimination Provision, which can reduce your Social Security benefit. The tax rules remain the same: your combined income determines whether your benefits are taxable.

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

Not necessarily. If Social Security is your only income and it is below the filing threshold for your age and filing status, you do not have to file. However, if you have other income or if you want to claim a refundable tax credit, you may benefit from filing even if you are not required to.

Can I change how much tax is withheld from my Social Security check?

Yes. You can request withholding by completing Form W-4V and submitting it to Social Security, or you can change your withholding at any time by submitting a new form. You can also request no withholding, though that may result in owing tax when you file your return.