How is Social Security taxed?

If your total income is more than $25,000 for an individual or $32,000 for a married couple filing jointly, you must pay federal income taxes on your Social Security benefits. Below those thresholds, your benefits are not taxed. That applies to spousal benefits, survivor benefits and Social Security Disability Insurance (SSDI) as well as to retirement benefits.

The portion of your benefits subject to taxation varies with income level. You’ll be taxed on:

• up to 50 percent of your benefits if your income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple filing jointly.
• up to 85 percent of your benefits if your income is more than $34,000 (individual) or $44,000 (couple). 

For purposes of determining how the Internal Revenue Service treats your Social Security payments, “income” means your adjusted gross income (line 11 on your 1040 form) plus nontaxable interest income plus half of your Social Security benefits. The IRS calls this your “combined” or “provisional” income.

Say you filed individually and your income for 2023 consisted of $40,000 in 401(k) withdrawals and a $1,500-a-month retirement benefit. Your combined income was $49,000 ($40,000 from your savings and half of the $18,000 you got from Social Security). You owed taxes taxes on 85 percent of your $18,000 in annual benefits, or $15,300, at the regular rate for your tax bracket. Nobody pays taxes on more than 85 percent of their Social Security benefits, no matter their income.

The IRS has an online tool you can use to calculate how much of your benefit income is taxable. The Social Security Administration estimates that about 56 percent of Social Security recipients owe income taxes on their benefits.

All of the above concerns federal income taxes. For the 2024 tax year, nine states will also tax Social Security to varying degrees: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Vermont, Utah and West Virginia. 

Some use the federal rules for determining if benefits are taxable, but most have their own deductions and exemptions based on age or income. For example, Colorado does not tax benefits for residents ages 65 and over, and New Mexico only taxes benefits for those with an adjusted gross income of at least $100,000 for a single filer or $150,000 for a couple filing jointly. From 2024 on, benefits are no longer subject to state taxes in Kansas, Missouri and Nebraska. Contact your state tax agency for details on how benefits are taxed.

Keep in mind

• If your child receives Social Security dependent or survivor benefits, those payments do not count toward your taxable income. That money is taxable if the child has sufficient income (from Social Security and other sources) to have to file a return in his or her own name.
• Supplemental Security Income (SSI) is never taxable.
• If you do have to pay taxes on your benefits, you have a choice as to how: You can file quarterly estimated tax returns with the IRS or ask Social Security to withhold federal taxes from your benefit payment.