Social Security benefits may become partially taxable depending on your total income.
The IRS determines whether benefits are taxed using income thresholds that measure how much additional income a retiree receives.
These thresholds help determine whether none, up to 50 percent, or up to 85 percent of Social Security benefits may be included in taxable income.
Understanding these limits can help retirees plan their retirement income and avoid unexpected taxes.
What Are Social Security Tax Thresholds
Social Security tax thresholds are income limits used by the IRS to determine when benefits may become taxable. These limits are based on a calculation called combined income.
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Combined income includes three components:
• Nontaxable interest
• Half of Social Security benefits
Once these amounts are added together, the total determines whether Social Security benefits may be taxed.
Social Security Tax Thresholds for Single Filers
The IRS uses the following thresholds to determine whether Social Security benefits may be taxable for single filers.
| Combined Income | Taxable Portion of Benefits |
|---|---|
| Under $25,000 | Social Security benefits are generally not taxable |
| $25,000 – $34,000 | Up to 50% of benefits may be taxable |
| Over $34,000 | Up to 85% of benefits may be taxable |
Retirees with income above these thresholds may have part of their benefits included in taxable income.
Social Security Tax Thresholds for Married Couples
Married couples filing jointly have higher combined income limits before benefits may become taxable.
| Combined Income | Taxable Portion of Benefits |
|---|---|
| Under $32,000 | Social Security benefits are generally not taxable |
| $32,000 – $44,000 | Up to 50% of benefits may be taxable |
| Over $44,000 | Up to 85% of benefits may be taxable |
Couples who withdraw money from retirement accounts or receive pension income may exceed these thresholds more easily.
How Combined Income Is Calculated
Combined income determines whether Social Security benefits are taxable. The calculation includes several types of income received during the year.
Income sources that count toward combined income include:
• Retirement account withdrawals
• Pension income
• Interest income
• Dividend income
• Part-time employment income
These income sources may increase combined income enough to make Social Security benefits partially taxable.
Example: A retiree receives $18,000 in Social Security benefits and $20,000 from a traditional IRA. Half of the Social Security benefit ($9,000) is added to the other income, creating combined income of $29,000.
Because this amount exceeds the $25,000 threshold for single filers, a portion of the Social Security benefit may be included in taxable income.
Why the Social Security Thresholds Matter
Many retirees assume Social Security benefits are always tax-free. However, the IRS thresholds determine whether part of the benefit must be included when calculating taxable income.
Once retirees cross the income limits, they may have up to 50 percent or up to 85 percent of their benefits included in taxable income.
This does not mean the entire benefit is taxed. Only the calculated portion becomes part of taxable income.
Why More Retirees Pay Tax on Social Security
The Social Security tax thresholds have not been adjusted for inflation in decades. As Social Security benefits increase with cost-of-living adjustments, more retirees cross the income limits.
Because of this, a growing number of retirees now pay federal tax on a portion of their benefits.
💻 Electronic Filing Recommendation
Electronic filing can make it easier to determine whether Social Security benefits are taxable.
• Tax software automatically calculates combined income and taxable benefits
• Electronic filing reduces math errors when reporting retirement income
• Direct deposit allows refunds to arrive faster
• The IRS confirms when a return has been successfully submitted
Electronic filing can help ensure retirement income is reported accurately.
Summary
Social Security tax thresholds determine whether benefits are included in taxable income.
These limits are based on combined income, which includes adjusted gross income, nontaxable interest, and half of Social Security benefits.
Retirees with combined income below the IRS thresholds generally pay no tax on their benefits.
Those above the thresholds may have up to 50 percent or up to 85 percent of benefits included in taxable income.
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