Whether you pay federal income tax on Social Security depends on your total income for the year
You may owe federal income tax on part of your Social Security benefits if your combined income exceeds certain thresholds. Combined income means your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. The IRS uses this combined income figure — not your benefits alone — to decide whether any of your benefits are taxable.
The thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. If your combined income falls below these amounts, you owe no federal tax on your benefits. If it exceeds them, you may owe tax on up to 85 percent of your benefits, depending on how far over the threshold you go.
No state income tax applies to Social Security benefits in any state. However, some states tax other retirement income, so your overall tax picture depends on where you live and what other income you receive.
Key Takeaways
- Combined income — not benefits alone — determines whether your Social Security is taxable, and combined income includes half your benefits plus other income sources.
- Single filers with combined income over $25,000 and married filers over $32,000 may owe federal tax on part of their benefits.
- You can reduce combined income by earning less from work, taking fewer withdrawals from retirement accounts, or delaying other income into the next year.
- The IRS sends Form SSA-1099 each January showing your benefits for the prior year; use this figure to calculate your combined income.
- No state taxes your Social Security benefits directly, though some states tax other retirement income you may receive alongside benefits.
How the IRS calculates combined income
Combined income is not the same as your total income. The IRS starts with your adjusted gross income (AGI) — the number on line 11 of your Form 1040 — then adds back certain deductions and adds half of your Social Security benefits.
For example, if you have $20,000 in pension income, $8,000 in interest from a savings account, and $18,000 in Social Security benefits, your combined income is $20,000 + $8,000 + ($18,000 ÷ 2) = $37,000. Even though your actual benefits are only $18,000, the combined income figure is $37,000, which exceeds the $25,000 threshold for single filers.
The half-benefits rule applies to everyone. It does not matter whether you worked or paid into Social Security; the calculation is the same for retired workers, spouses, and survivors.
The two-tier tax formula
If your combined income exceeds the threshold, the amount of your benefits that becomes taxable depends on how far over you go. The IRS uses a two-tier system that can tax between 50 and 85 percent of your benefits.
In the first tier, if your combined income exceeds the threshold by up to $9,000 (for single filers) or $12,000 (for married filers), you may owe tax on up to 50 percent of your benefits. In the second tier, if your combined income exceeds the threshold by more than those amounts, you may owe tax on up to 85 percent of your benefits.
The exact calculation is complex and involves multiple steps. Most people use tax software or a tax preparer to compute this, since doing it by hand requires careful attention to the IRS worksheet in Publication 915.
What counts toward combined income
| Income source | Counts toward combined income? |
|---|---|
| Wages from work | Yes, fully |
| Self-employment income | Yes, fully |
| Pension or annuity | Yes, fully |
| Interest and dividends | Yes, fully |
| Capital gains | Yes, fully |
| Rental income | Yes, fully |
| IRA or 401(k) withdrawals | Yes, fully |
| Tax-exempt interest (municipal bonds) | Yes, added back |
| Supplemental Security Income (SSI) | No |
| Veterans benefits | No |
| Roth IRA withdrawals (contributions only) | No |
Certain income sources do not count. Supplemental Security Income (SSI), Veterans Administration benefits, and Roth IRA withdrawals of contributions you already paid tax on are excluded. However, Roth IRA withdrawals of earnings do count.
How to report taxable Social Security on your tax return
In January, the Social Security Administration sends you Form SSA-1099 showing your benefits for the prior year. This form goes to the IRS automatically, so you must report it even if you do not owe tax on it.
You report your Social Security benefits on lines 5a and 5b of Form 1040. Line 5a shows the total benefits you received; line 5b shows the taxable portion. If your combined income is below the threshold, line 5b is zero. If it exceeds the threshold, line 5b contains the amount the IRS worksheet determines is taxable.
The taxable amount flows into your total income, which determines your tax bracket and may affect other tax credits and deductions you claim. This is why reducing other income sources can sometimes lower your overall tax bill by more than the income reduction alone.
Ways to reduce combined income
If your combined income is close to the threshold, small changes can make a difference. Earning less from work in a given year reduces combined income dollar-for-dollar. Delaying a large withdrawal from an IRA or 401(k) into the next year also works, since that withdrawal counts fully toward combined income.
Tax-exempt interest from municipal bonds counts toward combined income even though it is not taxable, so switching from taxable bonds to tax-exempt bonds does not help. However, if you have the option to take a Roth IRA withdrawal instead of a traditional IRA withdrawal, Roth withdrawals of contributions do not count toward combined income.
Some people coordinate the timing of retirement account withdrawals with years when they have lower other income. A year when you take no pension payments and earn little from work may be a good year to withdraw from a traditional IRA, since the combined income will be lower and less of your Social Security will be taxable.
State taxes and Social Security
No state taxes Social Security benefits directly. However, 13 states tax other retirement income — such as pensions, IRA withdrawals, and 401(k) distributions — that you may receive alongside your benefits. These states are Colorado, Connecticut, Delaware, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
If you live in one of these states and receive both Social Security and a pension or retirement account withdrawal, you may owe state tax on the pension or withdrawal, even though the Social Security itself is not taxed. Some of these states offer exemptions or deductions for retirement income above certain ages or income levels, so check your state's tax rules.
Frequently Asked Questions
Do I have to file a tax return if I only have Social Security income?
Not necessarily. If your only income is Social Security and your combined income is below the threshold, you have no federal tax filing requirement. However, if you have other income — wages, interest, dividends, or retirement account withdrawals — you may need to file even if your Social Security is not taxable. Check the IRS filing requirements for your age and income level.
What if I worked and paid into Social Security but now have very little income?
Your work history does not change the tax calculation. The combined income threshold applies to all Social Security recipients equally. If your combined income is below $25,000 (single) or $32,000 (married), none of your benefits are taxable, regardless of how much you paid in.
Can I avoid taxes by not cashing my Social Security check?
No. The IRS counts benefits as income in the year you receive them, whether you cash the check or not. If you do not need the money, you can deposit it in a savings account, but it still counts toward your combined income for tax purposes.
If I'm married and file separately, how does the threshold change?
The threshold drops to zero if you are married and file a separate return. This means any combined income at all will result in some of your benefits being taxable. Married couples almost always owe less tax by filing jointly, even if one spouse has little income.
Does the combined income threshold change each year?
No. The thresholds of $25,000 (single) and $32,000 (married filing jointly) have remained the same since 1984 and do not adjust for inflation. This means more people exceed the threshold each year as their income grows.