Social Security Benefits Taxability — Taxation of Social Security benefits

Social Security benefits can be subject to federal income tax, but most people pay tax on only part of their benefits, and many pay nothing at all. Whether you owe depends on your total income for the year.

The IRS uses a figure called provisional income to decide. Provisional income equals your adjusted gross income plus tax-exempt interest plus 50% of your annual Social Security benefits. The more income outside Social Security, the more of your benefits become taxable.

If you file as single or head of household: under $25,000 of provisional income, no benefits are taxed; between $25,000 and $34,000, up to 50% of benefits may be taxed; above $34,000, up to 85% may be taxed. If you file married filing jointly: under $32,000, no tax; $32,000 to $44,000, up to 50%; above $44,000, up to 85%.

Supplemental Security Income, or SSI, is never taxable. The thresholds above are not adjusted for inflation, so over time more retirees cross them.

You can ask SSA to withhold federal income tax from your monthly benefit using Form W-4V at 7%, 10%, 12%, or 22%. Thirteen states also tax Social Security benefits in some form, including Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia, with exemptions that vary by state and income.