Your spousal Social Security benefits may be taxable at the federal level, depending on your total household income for the year. Indeed, as of 2019, a majority of people receiving Social Security benefits pay some income tax on them. However, you do not pay taxes on more than 85% of your benefit amount.
To determine whether you must pay federal taxes on your spousal Social Security benefits, calculate your total income base and then add one-half of your annual Social Security benefit amount to it. This other income includes wages from employment, distributions taken from traditional 401(k) or IRA savings plans, and any interest or dividends that you have earned on investments.
Taxes due on your Social Security spousal benefits are in addition to any income tax you may owe on other income.
Spousal Social Security benefits are indeed taxable, under certain conditions, both at the federal level and by 13 states.
Individual Income Threshold
Because it is possible to collect spousal benefits on the Social Security account of an ex-spouse, you may be filing as an individual. If you file as an individual and your total income is less than $25,000, you do not need to pay taxes on your benefits. If your income is between $25,000 and $34,000, up to 50% of your benefits may be subject to tax. If your income is above $34,000, you may be taxed on up to 85% of your benefits.
Married Income Threshold
If you are married and filing jointly, you must include your spouse’s total income, even if your spouse has deferred his or her own benefit payments to accrue delayed retirement credits. If your combined taxable income is less than $32,000, you are not required to pay taxes on your spousal benefits. If your income is between $32,000 and $44,000, you may be required to pay taxes on up to 50% of your benefits. If your household income is greater than $44,000, up to 85% of your benefits may be taxed.
If you are married and file separately, you are likely to have to pay taxes on a portion of your benefits.
State Taxes on Social Security Benefits
As of 2019 there are 13 states that tax Social Security benefits to some degree: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, North Dakota, Vermont, Utah and West Virginia, though West Virginia is ending the practice beginning with the 2021 tax year. If you live in one of these states, check with your state tax agency for the specifics.