How Social Security Is Taxed

Depending on your income, up to 85% of your Social Security benefits can be federally taxable. A minority of states also tax SS benefits — and the rules differ significantly.

Federal Taxation Thresholds

The IRS uses "combined income" — your AGI plus tax-exempt interest plus half of your SS benefits — to determine what fraction of SS is taxable.

These thresholds have not been adjusted for inflation since 1984 — meaning more retirees face SS taxation each year.

States That Tax Social Security (11 states)

Most states fully exempt Social Security from state income tax. These states tax at least some SS income:

Strategies to Reduce SS Taxation

• • Roth conversions before Social Security starts. Reducing future taxable income lowers combined income later.
• • Delay claiming Social Security. Higher benefits mean higher lifetime income but you may still keep combined income under thresholds by working part-time or drawing down taxable accounts first.
• • Qualified Charitable Distributions (QCDs). Age 70½+ can donate up to $105,000/year from IRA directly to charity — excluded from combined income.
• • Move to a state that doesn't tax SS. Not usually decisive on its own, but combined with property tax, income tax, and cost of living, state choice matters.