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

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

Those limits have stayed unchanged since 1984, but retirees still have several ways to reduce what they owe and, in some cases, avoid Social Security taxes entirely.

How Social Security tax thresholds work

Combined income is the key figure used to determine how much of a beneficiary’s Social Security is taxable. It includes adjusted gross income, tax-exempt interest and half of the year’s Social Security benefits.

The tax rules differ for single filers and married couples filing jointly. For single filers, no tax is due if combined income is under $25,000. Between $25,000 and $34,000, as much as 50% of benefits may be taxed, and above $34,000, up to 85% may be taxed. For joint filers, benefits are not taxed below $32,000 of combined income. From $32,000 to $44,000, up to 50% may be taxable, and above $44,000, as much as 85% may be taxed.

Why more retirees run into the limits

The thresholds were established in 1984 and have never been indexed for inflation. A 3.6% cost-of-living adjustment in 2027 will raise benefit amounts, which could push some recipients into a higher tax bracket for Social Security.

Because the limits have not been updated for inflation, larger portfolio balances and growing 401(k) withdrawals can also increase combined income. Money taken from traditional tax-deferred accounts counts as ordinary income, which can raise the share of Social Security benefits subject to tax.

Ways to potentially reduce Social Security taxes

Even with unchanged thresholds, some retirees manage to keep income below the lower limits while still covering their expenses. These strategies can help preserve more of each monthly benefit payment.

• Use Roth withdrawals: Withdrawals from Roth accounts do not count as ordinary income, so they can provide extra cash without pushing combined income higher.
• Plan IRA withdrawals carefully: Spreading traditional retirement account withdrawals over time can soften the tax hit and help avoid large required minimum distributions, or RMDs. Small Roth conversions made each year with part of a traditional account can also reduce the impact once RMDs begin.
• Spend savings first: Using money from a savings account can reduce the amount that has to be withdrawn from an IRA, allowing retirees to take only the minimum needed and stay within the lower threshold.
• Consider qualified charitable distributions: These distributions can direct money to a charity while also helping reduce future RMDs.
• Keep an eye on municipal bond interest: Interest from municipal bonds counts toward combined income. If you are close to one of the thresholds, it may be worth limiting exposure to these investments.

Another useful step is to map out withdrawals ahead of time. Start by estimating how much of your expenses Social Security will cover and how much you need to draw from other assets to close the gap. Planning around the income thresholds can help lower the amount of tax paid on benefits.