When Is Social Security Taxable and How Much Do You Have to Pay?

Elderly couple reviewing information on their phone

The following is presented for informational purposes only and is not intended as tax or legal advice.

Social Security benefits can give you a reliable and steady income. However, up to 85 percent of your Social Security benefits, including retirement, survivor, and disability benefits (but not Supplemental Security Income) may be taxable depending on your total income.

Knowing the income limits and rules can help you decide when to start taking Social Security benefits, predict the impact of taking on extra work or withdrawing money retirement accounts, and help you estimate your income taxes for the year.

The tax rate depends on your total income

To determine if your Social Security income is taxable, you’ll have to add half your Social Security benefits to your total taxable income and compare the amount to the “base amount” for your tax filing status.

To do this:

  1. Add up all your income for Social Security and Equivalent Railroad Retirement benefits. These will be in box 5 of your Forms SSA-1099 and RBR-1099.
  2. Divide your total benefits in half.
  3. Add up all your taxable income from wages, interest, dividends, capital gains, taxable retirement account withdrawals, and any other sources. Include tax-exempt interest, such as interest from municipal bonds, to this amount.
  4. Combine half your benefits with your taxable income to find your “total income.”

There are also some circumstances, such as if you made tax-deductible contributions to a traditional individual retirement account (IRA) or if you received a lump-sum payout of a previous year’s Social Security benefits, that can impact your total income. Online calculators and tax preparation worksheets will walk you through calculating your total income in these special circumstances.

In the end, if your total income is at or above one of the following points (called base amounts), then you may need to pay income taxes on part of your Social Security benefits.

Tax Filing Status Up to 50% of your Social Security income is taxable Up to 85% of your Social Security income is taxable
Single, Head of Household, or Qualifying Widow(er) $25,000 $34,000
Married Filing Jointly $32,000 $44,000
Married Filing Separately* $0 $0

*If you lived apart from your spouse for the entire year, use the amounts from the first row. If you lived together at any point, your base amount is $0 and up to 85 percent of your benefits are taxable.

Your effective tax rate can vary

If your total income is above the base amount for your filing status, you’ll likely have to pay some income tax on your Social Security benefits.

We won’t drag you through the entire process — the calculation worksheets have 19 steps and can be fairly complex. But know that you may wind up paying income taxes on less than 50 or 85 percent of your benefits taxable, that’s simply the maximum amount.

To determine your effective tax rate and how much you owe, you can use an online calculator (such as this one) that will do the calculations for you and show you a summary of how it determined the results. Or, the IRS’s Publication 915 has worksheets you can use to do the calculations on your own.

Don’t forget about state income taxes

In addition to paying federal income taxes, you may have to pay state income taxes if you live in one of the 13 states that taxes Social Security benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.

If you live in one of these states, look up how and when it taxes your Social Security benefits. The formula doesn’t always match the IRS’s formula, and there may be deductions, exemptions, and credits that can decrease your overall state tax payments.

Strategies for minimizing your taxes

Knowing that your total income will determine when, and by how much, your Social Security benefits are taxable, you could look for ways to decrease how much you owe.

  • Delay claiming retirement benefits. You may be able to start receiving Social Security retirement benefits when you turn 62. However, waiting to start your benefits can increase your monthly benefit amount. If you’re still working when you’re 62, it may make sense to wait until you stop working before starting to receive your retirement benefits. Your Social Security benefits will increase, but you’ll be making less money overall, which could decrease how much you may have to pay in income taxes.
  • Consider required minimum distributions. If you have a traditional IRA, you may have to start withdrawing money (or pay a steep penalty) once you turn 70-and-a-half. Keep this in mind as you consider how your total income could change.
  • Tap your IRA first. With the above two tips in mind, if you’re not working and are at least 59-and-a-half years old, you might want to start withdraw money from IRAs rather than taking Social Security. The delay could increase your benefit amount, keep you from paying taxes on Social Security benefits now and decrease your required distributions later.
  • Plan with pensions in mind. If you aren’t working, it might make sense to start taking Social Security retirement benefits as early as possible if you know you’ll have a pension or other retirement income that will increase your total income later.
  • Strategically take Roth withdrawals. Roth IRA and 401(k) withdrawals won’t count toward your total income. If you’ve been saving in one of these accounts and need extra income, but are at or above the base income threshold, you may want to start drawing from your Roth accounts before taking money from taxable retirement accounts.

If you know you’ll have to pay income taxes on your Social Security benefits, you may want to have taxes automatically withheld from your monthly Social Security payments. You can do this by submitting Form W-4V and selecting whether you want 7, 10, 12, or 22 percent withheld from each payment. Alternatively, you could make estimated payments throughout the year.

Tagged in Taxes, Seniors, Savings accounts

Louis DeNicola is a personal finance writer with a passion for sharing advice on credit and how to save money. In addition to being a contributing writer at MMI, you can find his work on Credit Karma, MSN Money, Cheapism, Business Insider, and Daily Finance.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.