Whether your Social Security is taxed depends on your other income

Social Security benefits may or may not be taxed, depending on how much other income you have. The IRS uses a formula called combined income to decide. If your combined income stays below a certain threshold, you pay no federal tax on your benefits. If it goes above that threshold, you may owe tax on up to 85 percent of what you receive.

Combined income is not the same as your total income. It is calculated by taking your adjusted gross income, plus any non-taxable interest, plus half of your Social Security benefits. The thresholds are set by federal law and do not change year to year, so the same income level applies whether you file in 2024 or 2030.

Key Takeaways

  • Combined income is the measure the IRS uses, and it includes half your Social Security benefits plus your other income sources.
  • Single filers with combined income under $25,000 and married couples filing jointly under $32,000 owe no federal tax on benefits.
  • Between those thresholds and higher ones ($34,000 for single, $44,000 for married), you may owe tax on up to 50 percent of your benefits.
  • Above the higher thresholds, you may owe tax on up to 85 percent of your benefits.
  • Some states also tax Social Security, though most do not; check your state's rules separately.

The two income thresholds that determine your tax

The IRS applies two thresholds to your combined income. If you fall below the first one, you owe nothing. If you fall between the first and second, a portion of your benefits becomes taxable. If you exceed the second threshold, a larger portion becomes taxable.

For single filers, the first threshold is $25,000 and the second is $34,000. For married couples filing jointly, the first threshold is $32,000 and the second is $44,000. Married people filing separately face much stricter rules and should consult a tax professional. These thresholds have remained the same since 1984 and are not adjusted for inflation.

Because the thresholds do not move, more people cross them each year as their income grows. A retiree whose combined income was safely below $25,000 in 2010 may find themselves above it by 2024, even if their actual benefits have not changed much.

How to calculate your combined income

Start with your adjusted gross income (AGI) — the number on line 11 of your Form 1040. Add any tax-exempt interest you earned, such as interest from municipal bonds. Then add half of your Social Security benefits for the year.

The result is your combined income. Use this number to check which threshold applies to you. For example, a single filer with an AGI of $20,000, tax-exempt interest of $2,000, and $12,000 in Social Security benefits would have a combined income of $20,000 + $2,000 + $6,000 = $28,000. This exceeds the first threshold of $25,000 but stays below the second of $34,000, so some benefits become taxable.

Common sources of income that count toward combined income include wages, self-employment income, pensions, interest, dividends, capital gains, and distributions from retirement accounts. Roth conversions also count. Supplemental Security Income (SSI) does not count, but regular Social Security does.

What portion of your benefits becomes taxable

If your combined income falls between the first and second threshold, up to 50 percent of your benefits may be taxable. The exact amount depends on how far above the first threshold you are. The IRS worksheet on Schedule 1 of Form 1040 walks through the calculation, but the basic rule is: for every dollar above the first threshold, up to 50 cents of your benefits becomes taxable.

If your combined income exceeds the second threshold, the calculation becomes more complex. Up to 85 percent of your benefits may be taxable. Again, the exact amount depends on how far above the second threshold you are, and the IRS worksheet handles the math. In practice, very few people owe tax on the full 85 percent.

The taxable portion is added to your other income and taxed at your ordinary income tax rate. If you are in the 12 percent tax bracket, you pay 12 percent on the taxable portion of your benefits. If you are in the 22 percent bracket, you pay 22 percent.

State taxes on Social Security

Most states do not tax Social Security benefits at all. However, a handful of states do: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. The rules vary by state — some tax all benefits, some tax only a portion, and some have income thresholds similar to the federal ones.

If you live in or moved to one of these states, contact your state tax authority or a tax professional to understand how your benefits are taxed locally. State rules change periodically, so it is worth checking even if you have lived in the same state for years.

How to report taxable 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 previous year. This form goes to the IRS as well. You report the full amount on line 5a of your Form 1040, then calculate the taxable portion using the worksheet on Schedule 1.

If you are married filing jointly, both spouses' benefits go on the same line, and you use a combined worksheet to determine the taxable amount. If you are married filing separately, each spouse files their own return and uses their own worksheet, but the rules are stricter and the thresholds are lower (effectively zero).

If you underpaid tax during the year because you did not account for taxable benefits, you may owe when you file. If you overpaid, you will receive a refund. Some people choose to have the IRS withhold tax directly from their benefits to avoid a large bill at tax time — you can request this on Form W-4V.

Planning ahead to reduce taxable benefits

Because the thresholds are fixed and do not adjust for inflation, planning can matter. If you are close to a threshold, timing when you take distributions from retirement accounts, realizing capital gains, or claiming other income can shift whether you cross it in a given year.

For example, if you are single with combined income of $24,000, you are $1,000 below the first threshold. Taking a $2,000 distribution from a traditional IRA would push you $1,000 above the threshold and make some benefits taxable. Waiting until the next year, or taking the distribution in a year when other income is lower, might save you tax.

Roth conversions are a common planning tool, but they increase combined income in the year of conversion and may push you over a threshold. A tax professional can model different scenarios and help you decide whether a conversion makes sense in your situation.

Frequently Asked Questions

Do I have to pay federal income tax on all my Social Security?

No. If your combined income is below the first threshold ($25,000 for single filers, $32,000 for married filing jointly), you owe no federal tax on your benefits. If your combined income is above that threshold, only a portion of your benefits is taxable — never more than 85 percent.

What counts as combined income?

Combined income is your adjusted gross income plus any tax-exempt interest plus half your Social Security benefits. Wages, pensions, interest, dividends, capital gains, and retirement account distributions all count. The key is that half your benefits are included in the calculation, even though you may not owe tax on the full amount.

Does my state tax Social Security?

Most states do not. However, Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont do tax some or all Social Security benefits. Rules vary by state, so check with your state tax authority or a tax professional if you live in one of these states.

Can I reduce the amount of my benefits that are taxed?

You cannot change your benefits themselves, but you can manage other income. Timing when you take retirement account distributions, realizing capital gains, or claiming other income can affect whether you cross a tax threshold in a given year. A tax professional can help you model different scenarios.

What if I did not pay enough tax during the year?

You will owe the difference when you file your return. You can request that the IRS withhold tax directly from your Social Security benefits using Form W-4V, which may help you avoid a large bill at tax time.