Social Security you receive in retirement may not be exempt from taxes. Learn more about the potential impact on you.
A persistent misunderstanding about Social Security? That you won’t pay taxes on benefits you collect in retirement. In fact, about 50% of Americans who receive Social Security retirement benefits pay taxes on them.
When do those taxes kick in, how can you plan for them, and how does recent legislation affect the potential taxes you may pay on Social Security benefits? We sort it out.
Yes, but whether you have to pay federal income taxes on retirement benefits, and how much you may have to pay, depends on what’s called your combined (or provisional) income.
Your combined income is simply:
- Your adjusted gross income (all the income you received during a calendar year) PLUS
- Nontaxable interest (likely from municipal or government bonds) PLUS
- Income excluded from federal income taxes (healthcare benefits, for example) PLUS
- Half of your Social Security benefits from the previous year
That total helps you determine the percent of Social Security benefits that may be subject to income tax—anywhere from 0% to 85%. Say your combined income is $50,000; of that, $25,000 is your Social Security benefit. Up to $12,500 of that benefit may be subject to income tax at your current bracket.
| Combined income | Social Security benefits subject to federal income tax |
|---|---|
| Under $25,000 (single) or $32,000 (joint filing) | None |
| Between $25,000 and $34,000 (single) or $32,000 and $44,000 (joint filing) | Up to 50% can be taxed |
| Above $34,000 (single) or above $44,000 (joint filing) | Up to 85% can be taxed |
One note: It’s not just Social Security retirement benefits that are taxable. Survivor and disability benefits are also subject to income tax; Supplemental Security Income, or SSI, is not.
Maybe. Currently eight states—Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, and Vermont—tax Social Security benefits based on income.
No; in fact, until 1984, Social Security retirement benefits were not taxed. The current combined income threshold was established then, and has not been adjusted for inflation in over four decades
No. The only variables are your income bracket and filing status.
Social Security benefits or taxes may not be changed by any Senate tax bill that comes out of reconciliation. On July 4, 2025, HR 1, often referred to as the “One Big Beautiful Bill Act,” was signed into law, but it was the result of reconciliation. While it contains a provision that affects, but does not eliminate, the total federal income taxes that recipients of Social Security may pay, it does not permanently alter Social Security rules or codes.
Instead, the new legislation includes a temporary over-65 income tax deduction. Here’s how it works.
- The deduction lowers income subject to taxes in total; it does not eliminate federal income taxes on Social Security benefits.
- The potential deduction is $6,000.
- It applies to any income tax filer over the age of 65. It does not apply to anyone age 62-64 who may have taken Social Security retirement benefits.
- The deduction is only available for those with a modified adjusted gross income (MAGI) up to $75,000 (single filing) or $150,000 (joint filing).
- After those income limits, the deduction begins phasing out, 6% at a time. Once you reach a MAGI of $175,000 (single filers) or $250,000 (joint filers), it’s eliminated altogether.
- You do not need to itemize your taxes to take the deduction, and it is in addition to the extra standard deduction that those over age 65 may already take.
- To claim the deduction, married couples must file jointly.
- It expires in 2028.
There are two groups of those age 65 and over for whom the new deduction will likely have no impact. If your income was already below the combined income level. the deduction will not lower your potential tax bill, because you already have too little in income to be subject to federal income tax. Those with higher incomes are also not eligible for the deduction, which phases out entirely at set limits (see the bullet points above).
Yes; you’ll have to fill out IRS form W-4V. Four withholding rates—7%, 10%, 12%, and 22%—are available.
As always, a tax advisor can help you determine how new legislation and your retirement benefits, including the size of any required minimum distributions, may impact your tax situation. If you’re looking for news or specific information from the IRS on Social Security taxes, use their interactive tax assistant search tool.
What’s next?
Need help planning what your retirement might look like? Use this interactive retirement budget worksheet (PDF) to create your personal budgeting strategy for your post-work years.