Whether Your Social Security Is Taxed Depends on Your Other Income

Social Security benefits may be taxed, but only if your total income exceeds a certain threshold. The IRS uses a formula called combined income to decide this—it adds your adjusted gross income, nontaxable interest, and half of your Social Security benefits. If that total stays below the threshold for your filing status, you pay no federal tax on your benefits. If it goes above, you may owe tax on up to 85 percent of what you received.

The thresholds have not changed since 1984. For a single filer, the first threshold is $25,000; for married filing jointly, it is $32,000. A second threshold exists at $34,000 for single filers and $44,000 for married filing jointly—crossing it can push the taxable portion of your benefits higher. These dollar amounts do not adjust for inflation, which means more people cross them each year as wages and investment income grow.

Key Takeaways

  • Social Security becomes taxable only when your combined income (wages, interest, half your benefits) exceeds $25,000 for single filers or $32,000 for married filing jointly.
  • If you cross the first threshold, up to 50 percent of your benefits may be taxed; crossing the second threshold can raise that to 85 percent.
  • Withdrawals from traditional IRAs and 401(k)s count as income for this calculation, even if you do not need the money.
  • State taxes on Social Security vary widely—some states tax it, others do not, and rules differ based on your age and income.
  • You can ask the Social Security Administration to withhold taxes from your monthly payment so you do not owe a large bill at tax time.

How the IRS Calculates Combined Income

Combined income is the number that determines whether you owe tax. Start with your adjusted gross income (AGI)—the figure on your tax return after deductions like educator expenses or student loan interest. Add any nontaxable interest you earned, such as interest from municipal bonds. Then add half of the Social Security benefits you received during the year. That total is your combined income.

This calculation catches many people off guard because it includes income sources they thought would not matter. If you withdrew money from a traditional IRA or 401(k), that withdrawal counts as income even if you did not need it and gave it away. If you have rental income, capital gains from selling stock, or self-employment income, all of it goes into the combined income calculation. Pension income counts too. The only major income source that does not count is money from a Roth IRA withdrawal (after age 59½).

The Two Tax Thresholds and What They Mean

The first threshold is $25,000 for single filers, $32,000 for married filing jointly, and $0 for married filing separately. If your combined income stays below this number, none of your Social Security is taxed. If you cross it, the IRS taxes the lesser of two amounts: either 50 percent of the excess over the threshold, or 50 percent of your total benefits. Most people who cross only the first threshold pay tax on roughly 50 percent of their benefits.

The second threshold is $34,000 for single filers and $44,000 for married filing jointly. If your combined income exceeds this amount, the calculation becomes more complex. You may owe tax on up to 85 percent of your benefits. The actual percentage depends on how far above the second threshold you are and how much of your income comes from Social Security. Someone with substantial pension or investment income can end up paying tax on close to 85 percent of their benefits, while someone whose excess income is mostly from Social Security itself may pay less.

State Taxes on Social Security Vary by Location

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. The rules in each state differ significantly. Some states exempt benefits entirely for people over a certain age (often 55 or 60). Others use income thresholds similar to the federal system but with different dollar amounts. A few states tax only the portion that is taxable at the federal level.

Colorado, Kansas, and Nebraska have phased out their taxes on Social Security, meaning fewer people are affected each year. If you live in one of these states, check your state's tax authority website or your most recent state tax return to see whether you owe. The remaining 37 states do not tax Social Security benefits at all, regardless of your income. If you moved to a new state after you started receiving benefits, your tax situation may have changed.

How to Reduce the Amount of Tax You Owe

One straightforward way to lower your combined income is to delay taking withdrawals from retirement accounts. If you do not need the money from your IRA or 401(k) yet, leaving it alone keeps your combined income below the threshold. This works only if you have other income to live on. Once you reach age 73, you must take required minimum distributions (RMDs) from traditional IRAs and 401(k)s, which will increase your combined income whether you want them or not.

If you have not yet started Social Security, delaying your claim can also help. Your monthly benefit grows by about 8 percent for each year you wait past your full retirement age, up to age 70. A larger benefit means more income, but if you are not yet taking Social Security, you have no combined income to calculate, so you may owe less tax overall. This strategy works best if you have other income sources you can rely on in the meantime.

You can also ask the Social Security Administration to withhold federal income tax from your monthly payment. This does not change how much tax you owe, but it spreads the payment across the year instead of leaving you with a large bill in April. To set up withholding, fill out Form W-4V and send it to your local Social Security office, or request it online through your my Social Security account.

What Happens If You Earn Wages While Receiving Benefits

Earned income (wages from a job) counts toward your combined income and can push you over the threshold. However, the Social Security Administration also has a separate earnings test that applies before your full retirement age. If you have not yet reached full retirement age and you earn more than $23,400 in a year (the 2024 limit), Social Security reduces your benefit by $1 for every $2 you earn above that amount. In the year you reach full retirement age, the limit is higher ($62,160 in 2024), and the reduction applies only to earnings before the month you reach full retirement age.

Once you reach your full retirement age, the earnings test no longer applies—you can earn as much as you want without Social Security reducing your benefit. However, your wages still count as income for the tax calculation. If you work and receive Social Security, your combined income will likely exceed the threshold, and you will owe tax on your benefits.

Frequently Asked Questions

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

No. The IRS taxes based on the benefits you actually receive during the year, not on when you claim them. If you receive $20,000 in Social Security in a year, that full amount counts toward your combined income, even if you received it all in one lump-sum payment. Spreading the payments across months does not change the tax outcome.

What if I made a large capital gain this year—will that push my Social Security into the higher tax bracket?

Yes. Capital gains count as part of your adjusted gross income, which feeds into the combined income calculation. A one-time large gain from selling a home, stock, or business can push you over the second threshold and cause up to 85 percent of your benefits to become taxable that year. You may owe a large tax bill, but the effect is temporary—next year, if your income drops back down, your tax on benefits will too.

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, filing may be worth it anyway if you had taxes withheld from your benefits—you could get a refund. Check the IRS website for the current filing thresholds based on your age and filing status.

If I move to a state that does not tax Social Security, do I get a refund from my old state?

Not automatically. You may be able to file an amended return in your old state to claim a refund if you moved partway through the year and paid tax on benefits you should not have. The rules vary by state. Contact your old state's tax authority or a tax professional to find out whether you are owed money.