Are Social Security benefits subject to taxation? Yes. Many people are unaware of this, but Social Security income may be subject to federal, and possibly even state, taxation.
How is Social Security taxed? Federal taxation does not apply to all Social Security beneficiaries as there is a special calculation used to determine if your Social Security income will be taxed. If your “combined income” exceeds a specific threshold, a portion (up to 85%) of your Social Security income will be taxed. These thresholds vary depending if you are a single filer or joint filer.
What are the thresholds that determine if your Social Security will be taxed? Up to 50 percent of your Social Security benefits are subject to federal taxation if your income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple filing jointly. Up to 85 percent of your benefits are subject to federal taxation if your income is more than $34,000 for a single filer or $44,000 for joint filers.
Which states tax Social Security income? As of 2024, only 10 states have a Social Security income tax. These states include Colorado, Connecticut, Kansas, Minnesota, Montana, Nebraska (phasing out by 2025), New Mexico, Rhode Island, Utah, and Vermont. States have unique rules and therefore, not all residents are subject to this taxation.
Learn more about the taxation of Social Security here.
