“Is my Social Security income taxable?” That’s an important question many seniors and others approaching retirement age are asking. But the answer can be complicated.
Most retirees who rely solely on Social Security benefits for their retirement income don’t have to worry about paying federal income tax on their monthly payments. However, Social Security recipients with other sources of taxable income—such as wages, pensions, traditional IRA and 401(k) accounts, or rental income—probably have to pay taxes on a portion of their Social Security benefits.
But determining how much of your Social Security benefits are subject to federal taxes is not always easy. You need to run through some calculations to figure that out.
Fortunately, there’s some good news for everyone: At least some of your Social Security benefits will not be taxed. At a minimum, 15% of your benefits will be exempt, which is more than you can say for most other common forms of retirement income.
To see how you’ll fare when it comes to taxes on Social Security benefits, check out the information below. We’ll show you how to determine whether any of your Social Security benefits are taxable, calculate and report the tax if they are, pay taxes on benefits up front, lower the tax hit on your benefits, and more!
Is Social Security Taxable?
Generally, Social Security income is taxable. This is true whether you’re receiving monthly retirement, survivor, or disability benefits from the Social Security Administration. Tier 1 railroad retirement benefits count as Social Security income and are generally taxable benefits, too.
However, you don’t have to pay federal income taxes on Social Security payments if your combined income is below a certain amount. In addition, Supplemental Security Income (SSI) payments, which are sent to qualified people with a limited total income, aren’t taxable. Disability payments received for injuries incurred as a direct result of a terrorist attack against the U.S. or its allies aren’t taxable, either. This includes Social Security Disability Insurance (SSDI) payments.
Are Your Social Security Benefits Taxable?
The first step in determining if your Social Security benefits are taxable is to calculate what’s commonly called your “provisional income” (a.k.a., combined income).
For most seniors, your provisional income is equal to the combined total of 50% of your Social Security benefits, modified adjusted gross income, and tax-exempt interest. If you’re filing a joint return, include amounts for both spouses.
If your provisional income is below a certain amount, then you don’t have to pay taxes on any of your Social Security benefits. The exact threshold amount is based on your filing status.
- If your filing status is single, head of household, or surviving spouse, you don’t have to pay federal income taxes on any of your Social Security benefits if your provisional income is $25,000 or less.
- If you’re married and filing a joint return, you don’t have to pay income taxes on any of your Social Security income if your provisional income is $32,000 or less.
If you’re married but filing a separate return, whether any of your Social Security income is taxed also depends on whether you lived with your spouse for any of the tax year. If you lived apart from your spouse for the entire year, then your Social Security income is tax-free if your provisional income is $25,000 or less. If you lived with your spouse for any part of the tax year, then you will have to pay income tax on a portion of your Social Security benefits, regardless of your provisional income.
Tips for Calculating Your Provisional Income
Half of Social Security Benefits
When figuring 50% of your Social Security benefits, use the amount listed in Box 5 from each Social Security benefit statement (Form SSA-1099) you receive. (You should receive Form RRB-1099 if you receive railroad retirement benefits treated as Social Security.)
If you receive a lump-sum benefit payment for the current tax year and/or a previous year, include the full amount when calculating your Social Security benefits.
A couple’s Social Security benefits should also be combined if a joint return is filed.
Modified Adjusted Gross Income
For purposes of determining whether you must pay tax on your Social Security income, modified adjusted gross income means the adjusted gross income reported on your federal income tax return (Line 11 on your 2022 return), minus any tax deduction or exclusion for:
- Student loan interest
- Employer-provided adoption benefits
- Foreign earned income or housing
- Income earned by residents of American Samoa or Puerto Rico
If you’re claiming an exclusion of interest from Series EE and I U.S. savings bonds issued after 1989, don’t use the amount from Line 2b of Form 1040 when calculating your modified adjusted gross income. Use the amount from Line 2 of Schedule B (Form 1040) instead.
Nontaxable interest is reported on Line 2a of your federal return (Form 1040). This includes interest on municipal bonds. Tax-exempt interest is generally reported in Box 8 of Form 1099-INT, although certain types of exempt interest could be reported on other forms you receive, such as Form 1099-OID (for tax-exempt original issue discount) or Form 1099-DIV (for tax-exempt interest dividends from a mutual fund).
Average Social Security Monthly Payments in 2023
According to the Social Security Administration, following an 8.7% cost-of-living adjustment (COLA), the estimated average monthly Social Security payment for all retirees in January 2023 was $1,827, which comes to $21,924 for a full year (it was $1,681 and $20,172, respectively, before the COLA). For elderly couples who are both receiving benefits, the January 2023 monthly average payment was $2,972, or $35,664 per year ($2,734 and $32,808 before the COLA).
Because only 50% of your Social Security income is included in your provisional income, only $10,962 of the average Social Security recipient’s benefits count toward the $25,000 combined income threshold for determining whether Social Security income is taxable. Only $17,832 counts toward the $32,000 combined income amount for the average elderly couple.
Because these amounts are far below the provisional income thresholds for taxing Social Security benefits, most retirees don’t have taxable benefits if their retirement income doesn’t include other taxable income or exempt interest along with their Social Security benefits.
What Portion of Your Social Security Benefits Are Taxed?
If you determine that your Social Security benefits aren’t completely exempt from federal taxes, then the next question is how much of your benefits are subject to tax. Again, the calculation starts with your provisional income and filing status.
Filing Status: Single, Head of Household or Surviving Spouse
If your filing status is single, head of household, or surviving spouse and your provisional income is between $25,001 and $34,000, you’ll pay income tax on up to 50% of your Social Security benefits. If your provisional income is more than $34,000, up to 85% of your benefits will be taxed.
Filing Status: Married, Filing Jointly
For joint filers, up to 50% of your Social Security income is taxed if your provisional income is between $32,001 and $44,000, while up to 85% of your benefits will be taxed if your provisional income is more than $44,000.
Filing Status: Married, Filing Separately
Married taxpayers filing a separate federal tax return who lived apart from their spouse for the entire tax year will see up to 50% of their Social Security benefits taxed if their provisional income is between $25,001 and $34,000, but up to 85% of their benefits are taxed if their provisional income is above $34,000. Separate filers who lived together for any part of the year will have up to 85% of their benefits taxed by the federal government.
The instructions for Form 1040 and IRS Publication 915 have worksheets to help you determine how much of your Social Security income is considered taxable income. The Internal Revenue Service (IRS) also has an online tool to help you run through the calculations. Once you know the taxable amount, report it on Line 6b of your Form 1040.
|Filing Status||Provisional Income||Percent of Benefits Taxable|
|Single, Head of Household, Surviving Spouse, Married Filing Separately (lived apart for entire year)||$0 to $25,000||0%|
|$25,001 to $34,000||Up to 50%|
|$34,001 or more||Up to 85%|
|Married Filing Jointly||$0 to $32,000||0%|
|$32,001 to $44,000||Up to 50%|
|$44,001 or more||Up to 85%|
|Married Filing Separately (lived together for part of year)||$1 or more||Up to 85%|
Lump-Sum Social Security Payments
As noted above, you must include any lump-sum Social Security payment for a previous tax year when calculating the combined income that makes up your provisional income. Unfortunately, though, this can increase the taxable portion of your current-year Social Security benefits.
But there’s good news if you face this situation. Special tax rules permit you to calculate the taxable portion of a lump-sum payment for a previous year separately using your income for the earlier year. This could lower your overall taxable income by reducing the portion of your Social Security benefits upon which you must pay taxes.
If you take this route, make sure you check the box for Line 6c on your Form 1040. No adjustment to your previous year’s tax return is required, either (e.g., don’t file an amended return). And once an election to use the special lump-sum calculation method, you can’t change your mind without the IRS’s consent.
Note that this election doesn’t apply to lump-sum death benefits paid by the Social Security Administration. You don’t have to pay taxes on those payments.
Federal Tax on Your Social Security Benefits
Once you know how much of your Social Security benefits are subject to tax (as recorded on Line 6b of your Form 1040), that amount becomes part of your taxable income. As a result, the ultimate federal tax bite on your benefits depends on your tax bracket. For example, if you’re in the 22% bracket, the tax on your Social Security income won’t exceed that rate.
Don’t confuse the rates used to determine how much of your Social Security income is taxable—0%, up to 50%, or up to 85%—with the income tax rate imposed on your overall taxable income. They are different!
Of course, your tax burden will also be reduced or you won’t owe taxes at all if the standard deduction, itemized deductions, or other adjustments bring your taxable income down or reduce it to zero. Tax credits and previous tax payments can also cut your ultimate tax bill or even leave you with a tax refund.
Withholding Taxes From Your Social Security Benefits
Speaking of previous tax payments, you can have taxes withheld from your Social Security benefits by completing Form W-4V and sending it to your local Social Security Administration office. You select the rate at which they withhold taxes from your payments, but it must be at either a 7%, 10%, 12%, or 22% rate.
If you want to change the amount of withholding, simply submit another Form W-4V form with the new rate checked on Line 6. If you don’t want the Social Security Administration to withhold taxes any longer, complete another Form W-4V and check the box on Line 7.
Any taxes withheld during the year will be reported in Box 6 of your benefits statement (Form SSA-1099). That amount will be subtracted from your tax bill when you file your return for the year. (Tax withheld from Social Security benefits in 2022 are reported on Line 25b of your 2022 return.) So, having taxes withheld from your Social Security benefits can result in a smaller tax bill or larger refund.
In addition, because the federal income tax system operates on a “pay-as-you-go” basis (i.e., you’re supposed to pay taxes periodically throughout the year), having the government withhold taxes from your Social Security benefit payments can also help you avoid an underpayment penalty from the IRS. Generally, to avoid an underpayment penalty, you must have at least 90% of your tax liability for the year withheld, or 100% of the tax for the previous year tax (110% if your adjusted gross income for the previous year was more than $150,000). You will also dodge the penalty if your tax bill for the year is less than $1,000.
Estimated Tax Payments for Social Security Benefits
Don’t want the Social Security Administration to withhold taxes from your benefit payments? No problem! You can still avoid underpayment penalties by making quarterly estimated tax payments yourself. The same thresholds for avoiding the penalty that apply for withholding also apply for estimated payments.
Use Form 1040-ES to file and pay estimated taxes (you can also file and pay electronically through the IRS website). Worksheets in the instructions for Form 1040-ES will help you calculate the amount of each payment. Four estimated tax payments are due throughout the year, although they aren’t necessarily due every three months despite the fact that they’re often called “quarterly” payments.
State Taxes on Social Security Benefits
Just because you don’t owe taxes on Social Security benefits at the federal level, it doesn’t necessarily mean you’re spared the expense of paying taxes on your benefits at the state level. Currently, taxes on your Social Security benefits are possible in 12 states—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
However, the extent to which state taxes on Social Security benefits apply varies from state to state. For instance, in several states (Connecticut, New Mexico, Rhode Island, and West Virginia—to name a few), the requirement to pay taxes on your Social Security benefits kicks in only if your total income exceeds a certain level. In Colorado, paying taxes on your Social Security depends on your age. In Minnesota and Utah, Social Security benefits are generally taxable, but you may also qualify for a special tax deduction or credit to help soften the blow of having your benefits subject to state tax.