When Social Security Benefits Become Taxable, and Ways to Keep Income Below the Limit

Social Security benefits can become taxable once combined income tops $25,000 for an individual filer or $32,000 for a married couple filing jointly.

Those thresholds have remained unchanged since 1984, yet there are still several ways to reduce your tax bill and, in some cases, avoid Social Security taxes entirely.

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Social Security tax income thresholds

How much of your Social Security benefit is taxed depends on your combined income. That amount includes adjusted gross income, tax-free interest, and one-half of your yearly Social Security payment.

The rules differ for single and joint filers, and as much as 85% of benefits may be taxable if income is high enough. For single filers, no taxes are due if combined income is under $25,000. Up to 50% of benefits may be taxed when combined income falls between $25,000 and $34,000, and up to 85% may be taxed above $34,000. For married couples filing jointly, no taxes are due below $32,000 in combined income. Up to 50% of benefits may be taxed between $32,000 and $44,000, and up to 85% may be taxed above $44,000.

Why more retirees are hitting those levels

The income thresholds were established in 1984 and have never been indexed to inflation. A 3.6% cost-of-living adjustment (COLA) increase in 2027 will raise the size of Social Security benefits, which could move more recipients into a higher tax bracket.

Because the thresholds have not kept up with inflation, rising portfolio balances and larger 401(k) withdrawals can also increase combined income. Money taken from traditional tax-deferred accounts is treated as ordinary income, which can cause a greater share of Social Security benefits to be taxed.

Ways to potentially reduce Social Security taxes

Even with the long-frozen thresholds, some retirees still manage to stay under the lowest limits while meeting their living costs. These five strategies can help you keep more of each monthly benefit.

It also helps to plan withdrawals ahead of time. Start by estimating how much of your expenses Social Security will cover and how much must come from savings. Building your retirement plan around Social Security’s tax thresholds can help lower the amount you owe on benefits.