Whether your Social Security is taxed depends on your other income

Not all of your Social Security payment is automatically taxed. The amount you owe depends on your combined income — that is, your Social Security benefit plus half of it, plus any wages, pensions, interest, or dividends you receive. If that combined total stays below a certain threshold, you pay no federal tax on Social Security at all. If it goes above that threshold, you may owe tax on up to 85 percent of your benefit.

The thresholds are the same for everyone and have not changed since 1984. They are $25,000 for single filers and $32,000 for married couples filing jointly. These numbers do not adjust for inflation, which means more people cross them each year as wages and investment income rise.

Key Takeaways

  • Your Social Security is taxed only if your combined income (Social Security plus half of it, plus other income) exceeds $25,000 for single filers or $32,000 for married couples filing jointly.
  • If you are below the threshold, you owe no federal tax on Social Security, even if you work or have investment income.
  • If you are above the threshold, you may owe tax on up to 50 percent of your benefit at first, and up to 85 percent if your combined income is much higher.
  • State taxes on Social Security vary widely — some states tax it, some do not, and some have their own income thresholds.
  • You can ask the Social Security Administration to withhold federal tax from your monthly payment to avoid a large bill at tax time.

How to calculate your combined income

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

For example: suppose your AGI is $18,000, you earned $500 in tax-exempt interest, and you received $12,000 in Social Security. Half of $12,000 is $6,000. Your combined income is $18,000 + $500 + $6,000 = $24,500. You are below the $25,000 threshold, so none of your Social Security is taxed.

If instead your AGI was $22,000, your tax-exempt interest was $500, and your Social Security was $12,000, your combined income would be $22,000 + $500 + $6,000 = $28,500. You are $3,500 above the threshold. In this case, you would owe tax on up to 50 percent of your benefit — but the actual amount depends on how far above the threshold you are.

The two-tier tax formula

The federal government uses a two-tier system. The first tier applies if your combined income is between the threshold and $9,000 above it. The second tier applies if your combined income is more than $9,000 above the threshold.

In the first tier, you pay tax on the lesser of (a) 50 percent of the amount you are over the threshold, or (b) 50 percent of your Social Security benefit. In the second tier, you pay tax on the lesser of (a) 85 percent of your benefit, or (b) 85 percent of the amount you are over the higher threshold, plus 50 percent of the amount between the two thresholds.

This sounds complicated because it is. The Social Security Administration publishes a worksheet in the instructions to Form 1040 that walks you through it step by step. If you use tax software or work with a tax preparer, they will calculate this for you automatically.

State taxes on Social Security vary widely

Thirteen states tax Social Security income, but they do not all tax it the same way. Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont tax it like any other income. Illinois and Mississippi tax only the portion that is subject to federal tax.

The remaining 37 states do not tax Social Security at all. If you live in one of those states, you owe no state tax on your benefit regardless of your income level. If you live in a state that does tax it, that state may have its own income thresholds or may use the federal thresholds. Check your state's tax authority website or ask a tax preparer in your state what applies to you.

How to have taxes withheld from your Social Security check

You can ask the Social Security Administration to withhold federal income tax from your monthly benefit. This is useful if you know you will owe tax and want to avoid a large bill when you file your return.

To set up withholding, complete Form W-4V (Voluntary Withholding Request) and mail it to your local Social Security office, or bring it in person. You can also request withholding when you first claim benefits. You choose the withholding rate: 7 percent, 10 percent, 15 percent, or 25 percent of your monthly benefit.

If your circumstances change — you retire, your income drops, or you move to a different state — you can update your withholding by submitting a new Form W-4V. The Social Security Administration does not withhold state taxes, so if you live in a state that taxes Social Security, you will need to handle that separately, either through withholding from other income or by making estimated tax payments.

What to do if you did not have taxes withheld

If you did not have taxes withheld and you owe tax on your Social Security when you file your return, you can pay the amount due with your tax return. If you expect to owe again next year, you can file a new Form W-4V to start withholding, or you can make quarterly estimated tax payments using Form 1040-ES.

If you cannot pay the full amount when you file, the IRS offers payment plans. You can set up a short-term plan (120 days or less) for free, or a long-term installment agreement for a fee. Contact the IRS directly or work with a tax professional to discuss your options.

Frequently Asked Questions

Can I reduce the amount of my Social Security that gets taxed?

You cannot reduce the benefit itself, but you can reduce your other income, which lowers your combined income and may move you below the threshold. For example, delaying when you claim a pension, selling investments that generate taxable gains, or working less can all lower your combined income and reduce or eliminate the tax on your Social Security.

Does Medicare premium withholding count as income for Social Security tax purposes?

No. Medicare premiums are deducted from your Social Security check, but they do not count as income when you calculate your combined income for tax purposes. Only the amount you actually receive counts toward the threshold.

What if I worked and received Social Security in the same year?

Both your wages and your Social Security count toward your combined income. If you earned wages and also received Social Security, add your wages to your AGI, then add half your Social Security benefit. If the total exceeds the threshold, some of your Social Security may be taxed. This is true even if you earned the wages before you claimed Social Security.

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

If Social Security is your only income and none of it is taxable (because your combined income is below the threshold), you generally do not have to file a federal return. However, if you had taxes withheld or you are owed a refund for other reasons, filing a return may be worth it to get your money back.

Will my Social Security be taxed differently if I move to another state?

Yes, if you move to a state that taxes Social Security. Your federal tax situation stays the same, but you will owe state tax on the portion of your benefit that is taxable under that state's rules. Some states have different thresholds or exemptions, so your state tax bill may change even if your federal tax does not.