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When determining your income taxes in retirement and on your Social Security benefits, the IRS uses your “combined income” and filing status as the two main markers. At $36,000 a year from Social Security, none of your benefits would be taxable, since only half of your benefits are calculated into combined income. However most, if not all, retirees have additional income sources, such as retirement account withdrawals, a pension, part-time wages and more. When accounting for these as well, you may be subject to taxes on up to 85% of your total benefits. You may be able to manage this by using Roth accounts, getting income from non-taxable sources or reducing your income by working less or taking smaller withdrawals.
Are you looking for professional help with managing your retirement income and Social Security benefits? Speak with a financial advisor today.
How Social Security Benefits Are Taxed
If you receive Social Security retirement benefits, you may have to pay income taxes on them. To see whether you’ll need to, divide your Social Security income in half. Then add your adjusted gross income (AGI), plus any income from tax-exempt sources, such as municipal bonds. The result is called your “combined income” and it, along with your filing status, helps determine how much of your Social Security income is taxable.
For example, if you get $36,000 a year ($3,000 a month) from Social Security and have no other income, your combined income is $36,000 divided by 2, or $18,000. None of your benefits are taxable if your income is below $25,000 for a single filer or $32,000 for joint filers. So, in this case, you’d owe nothing to the federal government.
Odds are good, though, that you don’t rely only on Social Security. The Federal Reserve’s Report on the Economic Well-Being of U.S. Households found 79% of retirees had one or more sources of private income. If you’re one of this majority, some of your Social Security could be taxable. Here’s how the brackets work:
- Single Filers
- Combined income is less than $25,000: None of your benefits may be taxable
- Combined income is between $25,000 and $34,000: Up to 50% of your benefits may be taxable
- Combined income is above $34,000: Up to 85% of your benefits may be taxable
- Joint Filers
- Combined income is less than $32,000: None of your benefits may be taxable
- Combined income is between $32,000 and $44,000: Up to 50% of your benefits may be taxable
- Combined income is above $44,000: Up to 85% of your benefits may be taxable
Social Security Benefit Taxes Example
To see how this works, consider a single filer who receives $36,000 in Social Security and withdraws $24,000 from a retirement account each year. Their combined income would be half of their Social Security benefits ($18,000) plus $24,000 in other income, for a total of $42,000.
At $42,000 in combined income, a single filer’s benefits fall into the range where up to 85% can be taxable. Crossing that threshold doesn’t mean 85% of the $36,000 is automatically taxed, and it doesn’t mean the benefits are taxed at an 85% rate. The 85% applies only to the portion of combined income above $34,000, and the total taxable amount can never exceed 85% of benefits.
IRS Publication 915 includes a worksheet for the full calculation. In this example, it works out as follows:
- 85% of combined income above $34,000: $6,800 (($42,000 − $34,000) × 85%)
- 50% of the range between $25,000 and $34,000: $4,500 (($34,000 − $25,000) × 50%)
- Taxable Social Security benefits: $11,300 ($6,800 + $4,500)
Because $11,300 is less than 85% of total benefits ($30,600), the full $11,300 is taxable. That amount is added to the person’s other taxable income for the year and taxed at their regular federal income tax rates.
If you need help estimating how much of your Social Security will be taxed, a financial advisor can review your retirement income sources with you. Talk to an advisor today.
Strategies for Potentially Reducing Your Social Security Benefit Taxes
If you’re expecting $3,000 per month from Social Security, that steady income can be a major relief—but it may also come with a tax bill. Depending on your total income, up to 85% of your benefits could be taxable at the federal level. The good news is that with thoughtful planning, there are strategies that may help reduce how much of your Social Security income is exposed to taxes.
- Manage Other Sources of Income: Social Security taxes are based on your combined income, which includes adjusted gross income, nontaxable interest and half of your Social Security benefits. Reducing withdrawals from taxable accounts or spreading income across years can help keep you below key taxation thresholds. Timing matters, especially once benefits begin.
- Use Roth Accounts Strategically: Withdrawals from Roth IRAs are generally tax-free and don’t count toward combined income for Social Security taxation. Using Roth funds instead of traditional retirement accounts can help limit how much of your benefit becomes taxable. This strategy often works best when Roth planning starts years before retirement.
- Delay Social Security Benefits: If you haven’t started collecting yet, delaying benefits can provide two potential advantages. Monthly payments increase for each year you wait past full retirement age, and postponing benefits may give you time to draw down taxable retirement accounts first. That can reduce future required minimum distributions and taxable income later.
- Consider Qualified Charitable Distributions: Once you reach the eligible age, you can direct required minimum distributions from an IRA straight to a qualified charity. These distributions aren’t included in taxable income, which can help lower combined income and reduce Social Security taxation. This approach can be especially effective for charitably inclined retirees.
- Be Mindful of Investment Income: Interest, dividends and capital gains can all push combined income higher and trigger more Social Security taxes. Managing when you realize gains or favoring tax-efficient investments can help smooth income from year to year. Even small adjustments can make a noticeable difference over time.
The bottom line is that Social Security taxes aren’t just about your benefit amount, they’re about how all your income fits together. With proactive planning around withdrawals, investments and timing, you may be able to reduce the portion of your $3,000 monthly benefit that’s subject to tax. Working with a financial advisor can help tailor these strategies to your full retirement picture and keep more of your income in your pocket.
Get a quick estimate of your income taxes to better understand how your earnings and benefits may be taxed.
How the 2026 Senior Deduction Can Lower Your Tax Bill
Having part of your Social Security benefits taxed does not necessarily mean you have run out of ways to reduce federal taxable income. A temporary deduction available from 2025 through 2028 provides qualifying taxpayers age 65 or older with as much as $6,000 each. If two eligible spouses file a joint return, the maximum becomes $12,000.
Consider a 67-year-old single taxpayer who receives the entire $6,000 deduction in 2026. Suppose taxable income is $30,000 before applying the senior deduction. Applying the senior deduction would bring that figure to $24,000:
- $30,000 – $6,000 = $24,000
Eligibility for the maximum amount is income-sensitive. For an individual, the reduction in the deduction starts once modified adjusted gross income passes $75,000. On a joint return, that process starts after MAGI reaches $150,000. The deduction is reduced by 6% of the amount by which MAGI exceeds the applicable threshold. The provision is available to qualifying taxpayers who itemize as well as those using the standard deduction, and it is in addition to the longstanding extra standard deduction based on age.
The provision operates separately from the calculation that determines the taxable share of Social Security benefits. Claiming it therefore does not alter combined income or recalculate how much Social Security enters gross income. Its effect occurs later in determining taxable income.
In the example above, the taxpayer would still have the same Social Security inclusion calculated before applying the deduction. The change from $30,000 to $24,000 instead affects the amount of taxable income used to determine the final federal income tax liability.
Bottom Line
Receiving $3,000 a month from Social Security can cover a large share of your retirement income, but part of it may be taxed depending on your other income. How much of your benefit is taxed depends on your total income, not just your Social Security check. Coordinating withdrawals, using tax-advantaged accounts and managing investment income carefully may help lower your overall tax bill.
“One of the biggest surprises for retirees is that a portion of their Social Security benefit is subject to federal income tax. For those who aren’t yet subject to RMDs, you have a lot of flexibility in how you take withdrawals from your investments, which can help you reduce the amount of benefit included in taxable income,” said Matthew Hofacre, MSPFP, CFP®, EA.
Matthew Hofacre, MSPFP, CFP®, EA provided the quote used in this article. Please note that Matthew is not a participant in SmartAsset AMP, is not an employee of SmartAsset and has been compensated. The opinion voiced in the quote is for general information only and is not intended to provide specific advice or recommendations.
Retirement Planning Tips
- If you’re looking for ways to manage your Social Security benefits alongside your other sources of retirement income, a financial advisor can help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Social Security is a critical part of many retirees’ income plans. Estimate how much you’ll get from this important source of income using SmartAsset’s Social Security calculator.
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