Are Social Security Benefits Taxable? A Simple Guide
- Aaron Engleman, Two Teachers' Tax Service
- Mar 19
- 3 min read
Many taxpayers are surprised to learn that Social Security benefits can be taxable. Whether you pay tax—and how much—depends on your total income, not just your benefits.
What Determines Taxability?
The IRS determines the taxability of Social Security benefits using a calculation called combined income (also known as provisional income). This figure is not shown directly on your tax return but is used behind the scenes to determine how much of your benefits are included in taxable income.
Combined income is calculated as:
Your Adjusted Gross Income (AGI) (this includes wages, pensions, IRA distributions, business income, capital gains, etc.)
Plus any tax-exempt interest (such as interest from municipal bonds)
Plus 50% of your Social Security benefits
This calculation is important because even income that is normally not taxable—like municipal bond interest—can still increase the likelihood that your Social Security becomes taxable.
Once your combined income is calculated, it is compared to IRS threshold amounts based on your filing status. The higher your combined income, the greater the portion of your Social Security benefits that may be taxed, up to a maximum of 85%.
Tax Thresholds
Single Filers:
Below $25,000 → No Social Security is taxable
$25,000–$34,000 → Up to 50% of benefits may be taxable
Above $34,000 → Up to 85% of benefits may be taxable
Married Filing Jointly:
Below $32,000 → No Social Security is taxable
$32,000–$44,000 → Up to 50% of benefits may be taxable
Above $44,000 → Up to 85% of benefits may be taxable
Example: No Social Security is Taxable (Single)
Mark is single and receives:
$18,000 in Social Security benefits
$10,000 from part-time work
His combined income is:
$10,000 (AGI)
$9,000 (half of Social Security)= $19,000
Because $19,000 is below the $25,000 threshold, none of Mark’s Social Security benefits are taxable.
Example: Partially Taxable (Single)
Sarah is single and receives:
$20,000 in Social Security benefits
$18,000 from a part-time job
Her combined income is:
$18,000 (AGI)
$10,000 (half of Social Security)= $28,000
Since $28,000 falls between $25,000 and $34,000, up to 50% of her Social Security benefits may be taxable.
Example: Partially Taxable (Married Filing Jointly)
John and Lisa file jointly and receive:
$30,000 in Social Security benefits
$25,000 from pensions and other income
Their combined income is:
$25,000 (AGI)
$15,000 (half of Social Security)= $40,000
Because $40,000 falls between $32,000 and $44,000, up to 50% of their benefits may be taxable.
Example: Taxable at Up to 85% (Married Filing Jointly)
David and Karen file jointly and receive:
$36,000 in Social Security benefits
$50,000 from pensions and IRA distributions
Their combined income is:
$50,000 (AGI)
$18,000 (half of Social Security)= $68,000
Since $68,000 exceeds the $44,000 threshold, up to 85% of their Social Security benefits may be taxable.
How to Quickly Estimate If Your Benefits Are Taxable
Add up your total income (AGI)
Add any tax-exempt interest
Add half of your Social Security benefits
Compare the result to the thresholds above
If your combined income is below the base threshold, your benefits are not taxable. If it exceeds the thresholds, a portion (up to 85%) will be included in taxable income.
Key Takeaways
Social Security is not automatically tax-free
Other income—like wages, pensions, IRA withdrawals, and interest—can trigger taxation
At most, 85% of benefits are taxable, not 100%
A simple combined income calculation can help you estimate your situation
Understanding these rules can help with tax planning, especially when deciding when to draw retirement income from different sources.
Questions? Call, text or email me for more information.
Aaron Engleman, Enrolled Agent
Two Teachers’ Tax Service
269-449-8277
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