Is Social Security Included in Your AGI?

Social Security benefits are included in your adjusted gross income (AGI) if your total income, which consists of half of your Social Security benefits and other sources of income, exceeds a certain threshold. This can affect the taxation of those benefits and your eligibility for various tax credits and deductions, which in turn can impact your overall tax liability and financial situation. Here’s what you need to know.

A financial advisor can help optimize your retirement plan to minimize your tax liability.

What Is Adjusted Gross Income (AGI)?

Your AGI is the total income from all sources that you report on your tax return after accounting for specific deductions. It includes your wages, dividends, capital gains, business income, and retirement distributions.

This amount serves as the starting point for calculating your taxable income and tax liability. Here are four additional uses for your AGI:

Itemized deductions: Itemizing deductions, versus claiming the standard deduction, could yield a larger tax benefit for certain taxpayers. AGI can affect your eligibility to itemize deductions on your tax return, since certain deductions are subject to AGI limitations.
Tax credits: While deductions shrink your taxable income, credits reduce your tax liability on a dollar-for-dollar basis. Your AGI is used to assess your eligibility for various tax credits, such as the child tax credit, the earned income tax credit, and education-related tax credits.
Retirement account contributions: AGI influences your ability to contribute to a Roth IRA or deduct contributions to a traditional IRA. Your contribution or deduction limit begins to phase out once your AGI exceeds certain thresholds.
Medicare premiums: Medicare is government-sponsored health insurance for those 65 and older, or for younger individuals with certain qualifying health conditions. AGI is used to determine the premiums you pay for Medicare Part B and Part D. A higher AGI can result in higher Medicare premiums.

You also need to enter your AGI to e-file your tax return, and check the status of your tax refund with the IRS.

How to Calculate AGI

A senior trying to calculate his AGI for taxes.

If you’re using tax filing software, the program will calculate your AGI for you as you enter information about your income, deductions and household. If you’d like to find this number yourself, use these steps to calculate your AGI:

Gather your income sources: Start by collecting all the sources of taxable income that you received during the tax year. This includes wages, salaries, self-employment income, interest, dividends and rental income.
Take note of income exclusions: Exclude certain types of income that are not used to calculate your AGI. This may include tax-exempt interest, qualified distributions from Roth IRAs and some Social Security benefits.
Calculate your total income: Add up all your income sources to determine your total income for the year.
Make above-the-line deductions: Deduct “above-the-line” deductions, also known as adjustments to income, from your total income. Common above-the-line deductions include contributions to traditional IRAs, student loan interest, and educator expenses.
Calculate your AGI: Subtract the total above-the-line deductions from your total income. The result is your AGI. Mathematically, the formula is: AGI = Total Income – Above-the-Line Deductions.

Take note: When using your AGI to determine your taxable income and tax liability, you will report your AGI on the first page of your federal tax return (Form 1040).

How AGI Impacts Social Security Taxes

You will have to pay federal income tax on your Social Security benefits once your income passes certain thresholds. The IRS looks at your combined income, which is your adjusted gross income (AGI) plus nontaxable interest plus half of your Social Security benefits. If this total exceeds the IRS limits, up to 85% of your benefits can be taxed.

The rules are straightforward. Here’s how Social Security benefits are taxed, as of 2025.

For single filers, combined income between $25,000 and $34,000 means up to 50% of benefits are taxable, and above $34,000 the taxable portion can rise to 85%.
For married couples filing jointly, combined income between $32,000 and $44,000 means up to 50% of benefits may be taxed, and above $44,000 the 85% level applies.

These rules mean that your other taxable income—like wages, self-employment income, IRA withdrawals, dividends, or interest—directly affects how much of your Social Security is taxed.

For example, a single filer with $20,000 in IRA withdrawals and $25,000 in Social Security has a combined income of $32,500. That places them in the 50% bracket, so up to $12,500 of their benefits are taxable. If the same filer withdrew $30,000 from the IRA, combined income would rise to $42,500, and up to 85% of their benefits would be taxable.

The higher your AGI, the more of your benefits are exposed to tax. Even modest amounts of extra income can push you over the thresholds. This reduces the net value of your Social Security and can increase your total tax liability.

Managing AGI is important for retirees. Strategies like using Roth withdrawals, qualified charitable distributions, or health savings accounts for expenses can provide income without raising AGI. While these strategies don’t eliminate taxes entirely, they can reduce how much of your Social Security ends up taxed.

Understanding how AGI interacts with Social Security taxation helps you forecast your true after-tax retirement income. By planning withdrawals and monitoring combined income, you can stay below thresholds where possible and hold onto more of your monthly benefit.

Tips for Lowering Your AGI

Reducing your AGI can help lessen your overall tax liability. Here are five common tax strategies to help you lower your AGI if you’re retired:

Withdraw from tax-advantaged accounts first. If you have a mix of traditional and Roth retirement accounts, withdrawing from your Roth accounts first could reduce AGI. Qualified withdrawals from a Roth IRA are 100% tax-free.
Hold onto your investments longer. Withdrawing from taxable brokerage accounts can trigger capital gains tax. You can benefit from the lower capital gains tax rate by holding onto investments for at least one year before selling them. .
Consider a Roth conversion. If your income was too high during your working years to contribute to a Roth IRA, you may consider a conversion when you retire. A conversion lets you move traditional IRA assets to a Roth account so future withdrawals are tax-free. You will, however, have to pay taxes on your traditional IRA at the time of the contribution.
Find tax deductions and credits. Depending on your situation, there could be several tax deductions that you’re eligible for. For example, you may be able to deduct medical expenses that exceed 7.5% of your AGI, property tax deductions or mortgage interest if you’re still paying off your home.
Harvest losses. Tax loss harvesting is a strategy that helps you balance out the capital gains in your portfolio with capital losses. If losses exceed gains, you can deduct up to $3,000 in excess losses from your income.

Bottom Line

A senior researching the IRS rules for taxing his Social Security benefits.

It’s important to understand how Social Security is included in your AGI and what that can mean for you at tax time. Finding ways to strategically lower your AGI can help to minimize your tax liability and increase your eligibility for some tax credits. Remember to keep good records of your income and relevant deductions, and consider consulting with a tax professional or using tax software to help with the calculation.

Tips for Retirement Planning

Social Security benefits are just one of many considerations of retirement planning. A financial advisor can help you create a retirement plan to reach your long-term financial goals, including factoring in potential Social Security benefits. 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.
You can use a tool, like a free retirement calculator, to help estimate if you’re saving enough for your retirement goals.