Many people are surprised to learn that Social Security can be taxed. Whether yours is depends on how much other income you have. Some retirees pay nothing. Others pay federal tax on up to 85% of their benefit. Here is how to tell which group you are in.
The federal test: “combined income”
The IRS uses a number called combined income, sometimes called provisional income. You figure it like this:
- Your adjusted gross income, which includes pensions, wages, IRA and 401(k) withdrawals, interest and dividends
- plus any tax-free interest, such as from municipal bonds
- plus half of your Social Security benefits
Then you compare the total with these limits:
| Combined income | Single | Married filing jointly |
|---|---|---|
| None of your benefit is taxed | Under $25,000 | Under $32,000 |
| Up to 50% is taxed | $25,000 to $34,000 | $32,000 to $44,000 |
| Up to 85% is taxed | Over $34,000 | Over $44,000 |
These limits were set in the 1980s and 1990s and have never been raised for inflation. That is why more retirees pay tax on their benefits every year.
What “85% is taxed” really means
It does not mean you lose 85% of your check. It means up to 85% of your benefit is added to your taxable income and taxed at your normal rate. The other 15% is always tax-free.
Here is an example. Tom and Ellen are married and both retired. Their Social Security totals $40,000 a year, and Tom has a pension of $30,000.
- Half of their Social Security is $20,000.
- Their combined income is $30,000 plus $20,000, which is $50,000.
- That is over the $44,000 line, so part of their benefits fall in the 85% range.
After working through the IRS worksheet, about $11,100 of their $40,000 in benefits is taxable. At a 12% tax rate, that adds roughly $1,300 to their tax bill. The rest of their Social Security is tax-free.
A new deduction for people 65 and older
For tax years 2025 through 2028, people 65 and older can take an extra deduction of up to $6,000 each, on top of the standard deduction. It shrinks for people with higher incomes. It does not change how Social Security itself is taxed, but it lowers the income that tax is figured on, so many middle-income retirees pay less.
Why people with pensions usually pay
A pension counts in full toward combined income. So does money you take out of a traditional IRA, 401(k), 403(b) or 457(b). A retired teacher with a $40,000 pension and a modest Social Security check is almost always over the limits. For most people with a pension, the question is not whether Social Security is taxed, but how much.
How to pay the tax
You have three choices:
- Have tax taken out of your Social Security. Fill out Form W-4V and choose 7%, 10%, 12% or 22%. Send it to Social Security.
- Have extra tax taken out of your pension. Many retirees find this easier, since a pension lets you choose an exact dollar amount.
- Pay estimated tax four times a year.
If you do none of these, you may owe a large bill in April, and possibly a penalty.
State taxes
Most states do not tax Social Security at all. Fewer than ten states do, and most of those exempt people with low or middle incomes, so many retirees in those states still pay nothing. Rules change often, so check your state’s tax agency each year. Your pension may be treated differently from your Social Security. See which states tax public pensions.
Ways to lower the tax
- Plan your withdrawals. Taking money from a Roth IRA does not count toward combined income. Spreading traditional IRA withdrawals over several years can keep you under a higher line.
- Use the years before Social Security. Some people draw on savings in their 60s and wait to claim Social Security. That shifts income into years when less of it is taxed, and it raises the Social Security check for life.
- Give from your IRA. After 70½, giving to charity directly from an IRA keeps that money out of your income.
- Watch big one-time withdrawals. Selling a large investment or taking a big IRA withdrawal in one year can push more of your Social Security into the taxable range.
Social Security taxes and Medicare
Higher income can also raise your Medicare premiums. Medicare uses your income from two years earlier to decide whether you pay extra for Part B and Part D. Large IRA withdrawals or a big sale can trigger a higher premium two years later. See the Medicare section.
Questions people ask
Is Social Security taxed if it is my only income? Almost never. If Social Security is your only income, your combined income is usually far below the limits.
Are spousal and survivor benefits taxed the same way? Yes. They count as Social Security benefits on the same test.
Will my Form SSA-1099 tell me what to report? It shows your total benefits for the year. You or your tax software then use the IRS worksheet to find the taxable part.