When Social Security Benefits Are Taxable
Depending on your total income, up to 85% of your Social Security benefits may be subject to federal income tax. The key measure is "combined income" (also called "provisional income"), which includes adjusted gross income, nontaxable interest, and half of your Social Security benefits.
Combined Income Formula:
Combined Income = Adjusted Gross Income + Nontaxable Interest + 1/2 of Social Security Benefits
Combined Income = Adjusted Gross Income + Nontaxable Interest + 1/2 of Social Security Benefits
Taxation Thresholds — Single Filers
| Combined Income | Portion of Benefits Taxable |
|---|---|
| Under $25,000 | Benefits are not taxable |
| $25,000 – $34,000 | Up to 50% of benefits may be taxable |
| Over $34,000 | Up to 85% of benefits may be taxable |
Taxation Thresholds — Married Filing Jointly
| Combined Income | Portion of Benefits Taxable |
|---|---|
| Under $32,000 | Benefits are not taxable |
| $32,000 – $44,000 | Up to 50% of benefits may be taxable |
| Over $44,000 | Up to 85% of benefits may be taxable |
Source: Internal Revenue Service, "Are My Social Security Benefits Taxable?" irs.gov.
Example: Married Couple
Bob and Carol are married filing jointly. Their income sources:
- Bob's pension: $30,000
- Carol's part-time wages: $8,000
- Investment interest: $3,000
- Combined Social Security benefits: $36,000
Combined income calculation:
- AGI (pension + wages + interest): $41,000
- Plus nontaxable interest: $0
- Plus half of SS benefits: $36,000 ÷ 2 = $18,000
- Combined income: $59,000
Since $59,000 exceeds $44,000, up to 85% of their Social Security benefits ($30,600) may be included in their taxable income.
Important: These thresholds have not changed since they were set in 1984 (50%) and 1993 (85%). They are not indexed for inflation. As a result, a growing percentage of Social Security recipients pay tax on their benefits each year, even though Congress has not lowered the thresholds.
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