Social Security is taxed, but only if your income crosses certain thresholds
Whether you pay federal income tax on your Social Security depends on your total income for the year. If your combined income—Social Security plus wages, pensions, interest, and other sources—stays below a set amount, you owe nothing on your benefits. If it exceeds that amount, you may owe tax on up to 85 percent of your benefits.
The IRS uses a formula based on your "combined income," which is your adjusted gross income plus nontaxable interest plus half your Social Security benefits. The thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. These thresholds have not changed since 1984.
Most people who receive only Social Security and have no other income pay no tax. The tax hits when you work part-time, draw a pension, have investment income, or are married and file jointly with a spouse who has earnings.
Key Takeaways
- You owe tax on Social Security only if your combined income exceeds $25,000 (single) or $32,000 (married filing jointly).
- Combined income includes half your Social Security benefits plus all other income sources, so even modest earnings can push you over the threshold.
- If you are taxed, you pay tax on up to 85 percent of your benefits, not the full amount.
- You can have taxes withheld from your Social Security check to avoid a surprise bill at tax time, or make estimated quarterly payments.
How the IRS calculates what portion of your benefits is taxable
The calculation happens in two tiers. In the first tier, if your combined income exceeds the threshold by up to $9,000 (single) or $12,000 (married), you pay 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 pay tax on up to 85 percent of your benefits.
Example: A single person with $30,000 in combined income is $5,000 over the $25,000 threshold. Half of that excess is $2,500. The taxable portion of benefits is the lesser of $2,500 or 50 percent of the person's annual Social Security—whichever is smaller. If the person received $20,000 in benefits that year, 50 percent is $10,000, so the taxable amount is $2,500.
The second tier applies when combined income is high enough that the first-tier calculation alone would tax more than 50 percent of benefits. At that point, the formula shifts to allow up to 85 percent of benefits to be taxed. This affects people with substantial other income—typically those still working, receiving pensions, or with significant investment returns.
What counts as income for the combined income calculation
Combined income includes wages from work, self-employment income, pensions, annuities, capital gains, dividends, interest, and rental income. It also includes half your Social Security benefits themselves, which is why even people with modest earnings can cross the threshold.
Some income does not count: Supplemental Security Income (SSI) is excluded, as are certain veterans' benefits and some railroad retirement benefits. Tax-exempt interest from municipal bonds counts toward combined income even though it is not taxable itself.
If you are married and file jointly, your spouse's income counts too. This is a major factor for couples where one person receives Social Security and the other still works or has a pension. A spouse's earnings can push the household combined income well over the threshold even if the Social Security recipient has no other income.
Withholding taxes from your Social Security check
You can ask the Social Security Administration to withhold federal income tax directly from your monthly benefit. This prevents a large tax bill when you file your return. You request withholding by completing Form W-4V and submitting it to your local Social Security office or mailing it to the address on the form.
You choose the withholding rate: 7 percent, 10 percent, 12 percent, or 22 percent of your benefit. Most people who need withholding choose 10 or 12 percent. The withheld amount appears as a reduction in your monthly check, and Social Security reports it to the IRS as tax paid.
Withholding is optional, but it is the simplest way to handle the tax if you know you will owe. Without withholding, you can make estimated quarterly tax payments to the IRS instead, though that requires tracking deadlines and amounts yourself.
State income tax on Social Security
Most states do not tax Social Security benefits at all. Thirteen states tax some or all of your benefits, but most of those states exempt benefits for people over a certain age or with income below a threshold.
The states that tax Social Security are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Each has different rules about age, income limits, and the percentage of benefits subject to tax. If you live in one of these states, check your state tax agency's website or contact them directly for the rules that apply to you.
Federal withholding does not cover state tax. If your state taxes Social Security and you owe, you will need to handle that separately through your state tax return or by requesting state withholding from your benefit.
What to do if you receive a tax bill you did not expect
If you owe tax on Social Security and did not have withholding, you will see the amount due when you file your federal return. The IRS will not send a separate bill for Social Security tax—it is calculated as part of your overall tax liability.
If the amount surprises you, review your combined income calculation to make sure it is correct. Common mistakes include forgetting to include half your Social Security benefits in the calculation, or not counting all sources of income. If you find an error, you can file an amended return using Form 1040-X.
If you expect to owe tax next year based on your current income, start withholding now. Changing your withholding mid-year takes effect with your next payment, so the sooner you request it, the more you will have withheld before year-end.
Planning ahead if you are still working or have other income
If you receive Social Security and also have wages, self-employment income, or a pension, calculate your expected combined income before the year starts. This tells you whether you will cross the threshold and how much tax you might owe.
Some people reduce their tax burden by timing income—for example, deferring a bonus or delaying the sale of an investment until the following year. Others request withholding to spread the tax across the year rather than paying it all at once in April. Neither strategy is complicated, but both require knowing your numbers in advance.
If you are married and your spouse still works, pay special attention to your household combined income. A spouse's earnings can easily push you into the second tier, where up to 85 percent of your benefits become taxable. Running the numbers together before year-end can reveal whether withholding or other adjustments make sense.
Frequently Asked Questions
Do I have to pay tax on all of my Social Security?
No. At most, 85 percent of your benefits are taxable. If your combined income is below the threshold for your filing status, none of your benefits are taxed. Even if you are over the threshold, the tax applies only to the portion calculated under the IRS formula.
What if I work part-time and receive Social Security at the same time?
Your wages count as income in the combined income calculation. If your wages plus half your Social Security benefits plus any other income exceeds the threshold, some of your benefits become taxable. The more you earn, the more of your benefits may be subject to tax.
Can I avoid the tax by not reporting my Social Security?
No. Social Security reports all benefits to the IRS automatically. You must report your benefits on your tax return even if none of them are taxable. Failing to report them is considered tax evasion.
If I move to a state that does not tax Social Security, do I stop owing tax?
You stop owing state tax on Social Security, but you still owe federal tax if your combined income is over the threshold. Federal tax applies regardless of where you live. State tax is separate and depends on your state's rules.
Does my spouse's Social Security count toward my combined income?
If you file jointly, yes—your spouse's Social Security is part of the household combined income. Half of your spouse's benefits counts toward the calculation just as half of yours does. This is why married couples often cross the threshold even if each person's individual income is modest.