The IRS taxes some social security benefits, but not all of them

Whether you owe federal income tax on your social security depends on your combined income — a calculation that includes your wages, interest, dividends, and a portion of your social security itself. If your combined income stays below a certain threshold, you pay no tax on your benefits. If it exceeds that threshold, you may owe tax on 50 percent or 85 percent of your benefits, depending on how far over you go.

The IRS uses two income thresholds, called "bend points," to determine the taxable portion. For single filers in 2024, the first threshold is $25,000 and the second is $34,000. For married couples filing jointly, the thresholds are $32,000 and $44,000. These numbers do not change year to year — they are permanent. If your combined income falls below the first threshold, none of your benefits are taxed. Between the first and second threshold, up to 50 percent of your benefits become taxable. Above the second threshold, up to 85 percent becomes taxable.

Key Takeaways

  • Combined income, not social security alone, determines whether benefits are taxed — combined income includes wages, interest, dividends, and half your social security.
  • Single filers with combined income under $25,000 and married filers under $32,000 owe no federal tax on benefits.
  • Between the first and second threshold, up to 50 percent of benefits become taxable; above the second threshold, up to 85 percent may be taxable.
  • You can request the IRS withhold federal tax directly from your benefit payments, or you can make quarterly estimated tax payments instead.

How the IRS calculates combined income

Combined income is not the same as your adjusted gross income (AGI). To find your combined income, start with your AGI, add back any tax-exempt interest you earned, and then add half of your social security benefits. That total is what the IRS compares to the thresholds.

For example: suppose you are single, receive $20,000 in social security, earn $10,000 in wages, and have $2,000 in taxable interest. Your AGI is $12,000. Half your social security is $10,000. Your combined income is $12,000 + $10,000 = $22,000. Since $22,000 is below the $25,000 threshold, none of your social security is taxed.

Now suppose you earn $18,000 in wages instead. Your AGI becomes $20,000. Combined income is $20,000 + $10,000 = $30,000. You are now $5,000 over the first threshold. The IRS taxes 50 percent of the amount over that threshold: 50 percent of $5,000 = $2,500. So $2,500 of your social security becomes taxable income for that year.

When 85 percent of benefits becomes taxable

If your combined income exceeds the second threshold, the calculation becomes more complex. The IRS applies a two-step formula: first, it calculates 50 percent of the amount between the first and second threshold. Then it calculates 85 percent of the amount above the second threshold. Whichever is larger, plus the 50 percent calculation, is the taxable portion — but it cannot exceed 85 percent of your total benefits.

For a single filer with combined income of $50,000 and $20,000 in social security: the amount over the second threshold ($34,000) is $16,000. Eighty-five percent of $16,000 is $13,600. The amount between thresholds is $9,000 (from $25,000 to $34,000). Fifty percent of $9,000 is $4,500. The IRS adds these: $4,500 + $13,600 = $18,100. But 85 percent of the total benefit ($20,000) is $17,000, so the taxable portion is capped at $17,000.

This formula means that very few people pay tax on more than 85 percent of their benefits. The 85 percent cap applies to the total benefit amount, not to your income.

Requesting withholding from your benefit payments

If you expect to owe tax on your benefits, you can ask the Social Security Administration to withhold federal income tax directly from your monthly payment. You do this by completing Form W-4V and submitting it to your local Social Security office or mailing it to the address on the form.

On Form W-4V, you choose a withholding rate: 7 percent, 10 percent, 12 percent, or 22 percent of your benefit. The form does not let you specify a dollar amount — only a percentage. If you want to withhold a specific amount, you will need to use estimated tax payments instead.

Withholding through Social Security is simpler than making quarterly payments, but it is less flexible. Many people use it as a rough way to cover their tax liability without having to calculate and send payments four times a year.

Making quarterly estimated tax payments

If withholding from your benefits does not cover your full tax bill, or if you have other income sources, you can make quarterly estimated tax payments to the IRS. These are due on April 15, June 15, September 15, and January 15 of the following year.

To calculate your estimated payment, you need to know your expected combined income for the year, explore the bend-point formula to find the taxable portion of your benefits, and then calculate the tax owed on that amount plus any other taxable income. Many people use the IRS worksheet in the instructions for Form 1040 to do this, or they work with a tax preparer.

You can pay estimated taxes online through the IRS website, by mail, or by phone. If you underpay, you may owe a penalty when you file your return, though the IRS waives the penalty in some cases if your withholding and estimated payments together cover 90 percent of your current year tax or 100 percent of your prior year tax.

State taxes on social security

Most states do not tax social security benefits at all. However, a handful of states tax some or all of the benefits you receive. These states are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. The rules vary by state — some tax only benefits above a certain income threshold, others tax all benefits, and some offer exemptions for people over a certain age.

If you live in one of these states, you will need to check your state's tax rules separately. The federal thresholds do not explore to state tax, and the state may withhold tax from your benefits or require you to file a state return. Your state tax agency website will have worksheets and instructions specific to your situation.

Frequently Asked Questions

Can I reduce my combined income to avoid paying tax on benefits?

Not easily. Combined income includes half your social security by definition, so you cannot lower it by earning less. You could reduce other income sources — for example, by delaying when you claim investment gains or interest — but this only works if you have control over the timing of that income. Wages and salary cannot be delayed.

What if I did not withhold enough tax and owe money when I file?

You will owe the difference when you file your return. If you underpaid by a large amount, the IRS may charge a penalty for underpayment of estimated tax. You can reduce or eliminate the penalty by adjusting your withholding or estimated payments for the next year so you do not underpay again.

Do I have to file a tax return if my only income is social security?

Not necessarily. If your combined income is below the first threshold and you have no other filing requirement, you do not have to file. However, if you had federal tax withheld from your benefits, you may want to file to get a refund of the tax you overpaid.

Does the taxable portion of my benefits count as income for Medicare premiums?

No. Medicare uses your modified adjusted gross income (MAGI) to calculate premiums, which is different from the combined income used for tax purposes. Your MAGI for Medicare does not include the portion of social security that becomes taxable under the bend-point formula.

What if I work and receive social security at the same time?

Your combined income includes both your wages and your social security. If you are under full retirement age and still working, you may also face the Social Security earnings test, which reduces your benefits if you earn above a certain amount. That reduction is separate from the tax calculation — it happens before the IRS even looks at your income.