Whether your benefits are taxed depends on your other income

The federal government taxes some Social Security benefits but not all of them. Whether you owe tax on your benefits depends on your combined income — a figure that includes your wages, interest, dividends, and half of your Social Security payments added together. If your combined income stays below a certain threshold, you pay no federal tax on your benefits. If it exceeds that threshold, you may owe tax on up to 85 percent of what you receive.

The thresholds are the same whether you file single or married filing jointly, but married couples filing separately face a much stricter limit. These thresholds have not changed since 1984, so they catch more people each year as wages and benefit amounts rise.

Key Takeaways

  • Combined income of $25,000 or less (single) or $32,000 or less (married filing jointly) means no federal tax on your benefits.
  • Combined income between $25,000 and $34,000 (single) or $32,000 and $44,000 (married filing jointly) may trigger tax on up to 50 percent of your benefits.
  • Combined income above $34,000 (single) or $44,000 (married filing jointly) may trigger tax on up to 85 percent of your benefits.
  • Combined income includes wages, investment income, and half of your Social Security benefits — not just the benefits themselves.
  • Some states also tax Social Security benefits, though most do not; check your state's rules separately.

How combined income is calculated

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. This total is what determines whether your benefits are taxed.

For example, if you have $20,000 in wages, $3,000 in taxable interest, and receive $15,000 in Social Security benefits, your combined income is $20,000 + $3,000 + (half of $15,000) = $27,500. This puts you above the $25,000 single threshold, so some of your benefits would be taxed.

The reason half your benefits are included in the calculation is a quirk of how the formula was written in 1983. It does not mean you are taxed on half your benefits — the actual tax amount is determined by a separate calculation.

The tax brackets for single filers

If you file as single and your combined income is $25,000 or less, you owe no federal tax on your Social Security benefits.

If your combined income is between $25,000 and $34,000, you may owe tax on up to 50 percent of your benefits. The exact amount is the lesser of (1) half your benefits or (2) half the amount your combined income exceeds $25,000.

If your combined income exceeds $34,000, you may owe tax on up to 85 percent of your benefits. The calculation is more complex at this level and involves two separate formulas, but the result is capped at 85 percent of what you receive.

The tax brackets for married couples filing jointly

If you file as married filing jointly and your combined income is $32,000 or less, you owe no federal tax on your Social Security benefits.

If your combined income is between $32,000 and $44,000, you may owe tax on up to 50 percent of your benefits. The calculation is the same as for single filers: the lesser of (1) half your benefits or (2) half the amount your combined income exceeds $32,000.

If your combined income exceeds $44,000, you may owe tax on up to 85 percent of your benefits. Again, the exact amount is determined by a two-step formula, but the result cannot exceed 85 percent of your total benefits.

Married couples filing separately face a much harsher rule: if you lived with your spouse at any point during the year, your threshold is $0, meaning any combined income at all may trigger taxation of your benefits.

What counts as income for this calculation

Wages, salaries, and self-employment income all count. So do taxable interest, dividends, capital gains, rental income, and distributions from retirement accounts like traditional IRAs and 401(k)s.

Tax-exempt interest (such as interest from municipal bonds) also counts toward combined income, even though it is not taxable itself. This is one of the few places where tax-exempt income affects your tax bill.

Roth IRA distributions do not count as income for this purpose, which is one reason some people convert traditional IRA money to a Roth in retirement. Supplemental Security Income (SSI) does not count either, nor do veterans benefits or workers compensation.

State taxes on Social Security benefits

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

Most of these states offer exemptions or deductions that reduce or eliminate the tax for many retirees. For instance, some states exempt benefits for people over a certain age, or phase out the tax based on income. Check your state's department of revenue website for the specific rules in your state.

How to report Social Security income on your tax return

You receive a Form SSA-1099 each January showing the total Social Security benefits you received in the prior year. This form goes to box 5a of your Form 1040 (the main federal income tax form).

If you owe tax on your benefits, you calculate the taxable amount using a worksheet in the instructions to Form 1040, or you can use tax software that walks you through the calculation. The taxable portion goes on line 5b of your Form 1040.

If you did not receive a Form SSA-1099 by early February, contact the Social Security Administration at 1-800-772-1213 to request one. You will need it to file your return accurately.

Frequently Asked Questions

Can I reduce the tax on my Social Security benefits?

Yes, by managing your other income. If you are close to a threshold, delaying a large withdrawal from a retirement account, deferring a bonus, or timing the sale of an investment can push you below the limit. Some people convert traditional IRA money to a Roth in retirement to avoid this tax, though the conversion itself counts as income in the year it happens.

What if I did not pay tax on my benefits and now owe it?

You can file an amended return using Form 1040-X for any year within the past three years. If you owe a significant amount, you may also set up a payment plan with the IRS. Contact the IRS at 1-800-829-1040 or visit irs.gov to discuss your options.

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

Not necessarily. If your only income is Social Security and your combined income is below the threshold for your filing status, you do not have to file. However, you may want to file anyway if you had taxes withheld from your benefits, because you could receive a refund.

Can the IRS withhold taxes directly from my Social Security check?

Yes. You can request federal income tax withholding on your benefits by completing Form W-4V and submitting it to your local Social Security office. You can choose to have 7, 10, 12, or 22 percent withheld. This does not change whether your benefits are taxed — it just spreads the payment across the year instead of owing it all at tax time.

Are my spouse's Social Security benefits included in my combined income?

No. Each person calculates their own combined income separately, even if you file a joint return. Your spouse's benefits and your benefits are each treated independently for purposes of determining taxation.