How Social Security is Taxed

Many of us must pay federal income taxes on our Social Security benefits. This usually happens only if you have other substantial income in addition to our benefits (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return).

We will pay tax on only 85 percent of your Social Security benefits, based on Internal Revenue Service (IRS) rules. If you:

• file a federal tax return as an “individual” and your combined income* is
  • between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
  • more than $34,000, up to 85 percent of your benefits may be taxable.
• file a joint return, and you and your spouse have a combined income* that is
  • between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
  • more than $44,000, up to 85 percent of your benefits may be taxable.
• are married and file a separate tax return, you probably will pay taxes on your benefits.

Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your “combined income“

IRS Publication 915 Social Security and Equivalent Railroad Retirement Benefits