Whether your Social Security is taxed depends on your other income

The federal government taxes Social Security benefits for some people but not others. The deciding factor is your combined income — which includes your wages, pensions, interest, dividends, and half of your Social Security benefits added together. If that total stays below a certain threshold, you pay no federal tax on Social Security. If it goes above that threshold, you may owe tax on up to 85 percent of your benefits.

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, though most do not.

Key Takeaways

  • You only pay federal tax on Social Security if your combined income (wages plus half your benefits) exceeds $25,000 as a single filer or $32,000 as a married couple filing jointly.
  • If you are over the threshold, the taxable portion is calculated using a formula that can result in up to 85 percent of your benefits being subject to tax.
  • Thirteen states tax Social Security benefits under their own rules, regardless of the federal threshold.
  • You can reduce your combined income by timing withdrawals from retirement accounts or managing other income sources before you claim Social Security.

How the federal tax calculation works

The IRS uses a two-tier system. If your combined income is between the base threshold and a higher threshold ($34,000 for single filers, $44,000 for married couples), you may owe tax on up to 50 percent of your benefits. If your combined income exceeds the higher threshold, you may owe tax on up to 85 percent of your benefits.

The actual amount depends on how far over the threshold you are. The calculation is complex — the IRS worksheet on Form 1040 walks through it step by step. The key point is that you are never taxed on 100 percent of your benefits, and the tax applies only to the portion that pushes you over the threshold, not to all your benefits.

For example, a single filer with $30,000 in combined income is $5,000 over the base threshold. Half of that excess ($2,500) may be taxable, but only if it does not exceed the amount of benefits received that year. The calculation stops there unless combined income exceeds the higher threshold.

Which states tax Social Security

Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia tax Social Security benefits to some degree. Each state uses its own rules and thresholds, which differ from the federal system.

Some states exempt benefits entirely for people over a certain age (usually 59½ or 62). Others phase in the tax gradually or allow deductions that reduce the taxable amount. If you live in one of these states, you will receive a state tax form or worksheet along with your federal materials, or you can contact your state tax authority for the specific rules that apply to you.

What counts as combined income

Combined income includes wages from work, self-employment income, pensions, annuities, interest (taxable and tax-exempt), dividends, capital gains, and distributions from retirement accounts. It also includes half of your Social Security benefits themselves. This is the figure that determines whether you cross the threshold.

Some income does not count: Supplemental Security Income (SSI), Medicaid, food stamps, and housing assistance do not factor into the combined income calculation. Neither does money from a Roth IRA conversion, though the conversion itself is counted as income. If you are unsure whether a specific income source counts, the IRS Publication 915 lists all the types that do.

Reducing your tax burden before claiming

If you are still working or have other income sources, you can sometimes lower your combined income by timing when you take money from retirement accounts. Delaying a large IRA withdrawal until after you claim Social Security, or spreading withdrawals across multiple years, can keep your combined income below the threshold in some years.

Roth conversions work differently — they count as income in the year you convert, which can push you over the threshold. But once the money is in a Roth, future withdrawals do not count as income. This strategy requires planning with a tax professional, because the short-term tax bill may or may not be worth the long-term benefit.

If you are still employed and earning wages, your combined income will likely be high enough that some of your benefits are taxable. In that case, you may want to request that extra tax be withheld from your benefit check each month, so you do not owe a large amount when you file your return.

How to report Social Security on your tax return

You will receive a Form SSA-1099 from Social Security each January showing the total benefits you received the previous year. You report this amount on your federal tax return using Form 1040 and the Social Security Benefits Worksheet. If any of your benefits are taxable, you enter the taxable amount on the appropriate line of your return.

If you are married and file jointly, both spouses' benefits go on the same return, and the combined income threshold applies to the household total. If you are married and file separately, the threshold drops to $0 — meaning nearly all of your benefits become taxable. This is one reason most married couples file jointly.

You do not have to file a return at all if your income is below the standard deduction for your age and filing status. But if you have any taxable Social Security benefits, you must file to report them, even if your total income is otherwise below the threshold for filing.

Frequently Asked Questions

Can I avoid paying tax on Social Security by not claiming it yet?

Delaying your claim does not prevent taxation once you do claim. The tax rules apply to whatever year you receive the benefits. However, delaying can reduce your combined income in earlier years if you are still working, which may lower your tax bill in those years.

Does Medicare premium withholding count as income?

No. Medicare premiums withheld from your Social Security check do not reduce the amount counted as income for tax purposes. The full benefit amount, before any withholding, is what counts toward your combined income threshold.

What if I made a mistake on a prior year's return?

You can file an amended return using Form 1040-X for any year within three years of the original filing date. If you underpaid tax on Social Security, you will owe the tax plus interest. If you overpaid, you can request a refund.

Does Roth IRA withdrawal count as income for the Social Security tax calculation?

No. Withdrawals from a Roth IRA do not count as income for the combined income calculation. However, conversions from a traditional IRA to a Roth do count as income in the year of conversion, which can temporarily push you over the threshold.

If I live in a state that taxes Social Security, do I pay both federal and state tax?

Possibly. Some states tax Social Security even if you do not owe federal tax, because they use different thresholds or rules. You may owe state tax, federal tax, both, or neither depending on your income and which state you live in. Check your state's tax authority website for the specific rules.