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No matter a person’s income, 15% of their Social Security benefit is tax-free.
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Up to 85% of your Social Security may be taxable.
If your provisional income is above $25,000 as a single filer or $32,000 as a joint filer, you may owe federal income taxes.
You can pay estimated taxes quarterly, through benefit withholdings, or in full with your federal tax return.
See Personal Finance Insider’s picks for the best tax software »
Taxes don’t get a whole lot easier later in life. In fact, when you throw Social Security into the mix, things can get pretty complicated.
Most retirees can’t subsist on Social Security alone. The average retiree currently receiving Social Security benefits is getting just $1,657 a month (the maximum for someone at their full retirement age in 2023 is $3,345 a month).
Additional income from investments and retirement savings accounts or pensions are often necessary to fund a comfortable lifestyle and afford the high cost of healthcare.
What is Social Security?
Social Security is a federal program that pays monthly benefits to retirees, surviving spouses and children, and disabled people. About 65 million Americans collect Social Security monthly.
The money for Social Security, as well as Medicare, comes from a tax that every working American pays. It’s a 7.65% tax on every paycheck that is matched by employers. Self-employed people cover both the employee and employer portions. That tax is levied on the first $147,000 of a worker’s income in the 2022 tax year.
So, while workers pay a tax to fund the Social Security program, other people are benefiting by collecting a monthly check. Those benefit checks are then often taxed as income, returning a portion of the money to the federal government.
Use Personal Finance Insider’s calculator to estimate your refund, or how much you owe the IRS, in a few easy steps
Is Social Security taxable?
Yes, Social Security may be taxable. But the portion of benefits that are taxed depends on a person’s filing status and provisional income.
There are two steps in determining whether your Social Security benefits are taxable and at what rate:
Find your provisional income, which is equal to adjusted gross income (AGI) plus non-taxable interest plus half of your annual Social Security benefit. Married couples calculate theirs by taking half of each person’s annual Social Security benefit and adding it to their combined income. Apply that total to the following income limits to find out how much of the Social Security benefit will be taxed at the your marginal tax rate:
Provisional income for a single, head of household, qualifying widow(er), or married but separate filer
Provisional income for a married, joint filer
Amount of Social Security benefit taxed
Under $25,000
Under $32,000
0% of Social Security benefit taxed at filer’s marginal tax rate
Between $25,000 and $34,000
Between $32,000 and $44,000
Up to 50% of Social Security benefit taxed at filer’s marginal tax rate
More than $34,000
More than $44,000
Up to 85% of Social Security benefit taxed at filer’s marginal tax rate
Note: Married couples who file taxes separately but lived together at any time during the tax year are taxed on up to 85% of their Social Security benefits regardless of their income level.
How to report Social Security income on your federal taxes
Every Social Security recipient receives a benefit statement, Form SSA-1099, in January showing the total dollar amount of benefits received during the previous year. This includes retirement, survivor’s, and disability benefits.
Take that total — shown in Box 5 — and report it on Line 6a of Form 1040 (your federal tax return) or Form 1040-SR (an alternative tax return for people age 65 and older.) The IRS provides a worksheet to help you calculate what portion of your benefits are taxable and add the amount to your other income. More simply, you can use online tax software or consult a tax professional to crunch the numbers.
Example of Social Security taxation
Let’s say a single, 68-year-old retired woman, Susan, receives a Social Security benefit totaling $18,000.
Susan collected $30,000 from other means throughout the year, so her provisional income is $39,000 (half of her Social Security benefit + her AGI and any other tax-exempt interest).
Then, 85% of Susan’s total Social Security benefit, $15,300, is subject to federal income tax.
If you collect Social Security and anticipate you’ll need to pay federal taxes on your benefit, you can make estimated quarterly payments (like an independent contractor would) or elect to have federal taxes withheld — either 7%, 10%, 12%, or 22% of your monthly benefit. You can also have additional taxes withheld from your other income sources, such as a pension.
Important: The following states also tax federal Social Security benefits, according to AARP: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
Social Security benefits for retirees, beneficiaries, and disabled people are considered a form of income by the IRS. But only a portion is subject to taxation — 15% of your total benefit for the year is always tax-free.
If your income for the year (including half of your Social Security benefit) is more than $34,000, or more than $44,000 if you’re married, then you can expect to pay income taxes on most of the benefits you collected.
If you’d prefer to pay taxes as you go to avoid a large bill during tax season, opt in to withholding by filling out the form and returning it to your local Social Security office by mail or in person.