Do Tax Brackets Include Social Security?

By
Bruce Miller
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Bruce Miller has 30+ years of experience providing financial planning services to clients. He is a contributor to several financial websites.
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Updated March 13, 2023
Reviewed by
Ebony Howard
Ebony Howard
Reviewed by Ebony Howard
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Ebony Howard is a certified public accountant and a QuickBooks ProAdvisor tax expert. She has been in the accounting, audit, and tax profession for more than 13 years, working with individuals and a variety of companies in the health care, banking, and accounting industries.
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Yes, a portion of your Social Security (SS) benefits may be subject to federal taxation using tax brackets. Your tax bracket is determined by your net taxable income, as shown on Form 1040. This value is your gross income minus all allowable deductions. For Social Security income that is combined with your other income, you may be subject to income tax on up to 85% of your SS benefits.

Key Takeaways

  • Up to 85% of Social Security income benefits may be taxed depending on total annual income. Eleven states also individually tax Social Security income.
  • Each year, thresholds for federal income tax brackets, as well as Social Security income limits, are published by the IRS.
  • Review IRS Publication 915 for the process of calculating your income tax due on benefits.

What Portion of Your Household's Social Security Benefits Is Subject to Federal Income Tax?

If you are an individual filer, earned income between $25,000 and $34,000 will require you to pay income tax on up to 50% of your benefits. If you earn more than $34,000, you may have to pay income tax on up to 85% of your benefits. If you file a joint return, these thresholds are between $32,000 and $44,000, and over $44,000, respectively. Married couples who live together but file separately will probably pay taxes on their benefits.

Review IRS Publication 915 for the process of calculating this amount. After calculating this amount, you must include it on Form 1040 as ordinary income.

A senior whose only source of income is Social Security does not have to pay federal income taxes on their benefits. If the taxpayer receives other sources of income, including tax-exempt interest income, they must add one-half of annual Social Security benefits to their other income and then compare the result to a threshold set by the IRS. If the total is more than the IRS threshold, some Social Security benefits are taxable.

What Is Ordinary Income?

Ordinary income represents most of your household's taxable income from sources such as wages, self-employment income, pensions, Social Security benefits, rents, royalties, and interest.

Income from your 401(k) does not count as income in regard to taxes on Social Security benefits.

Other forms of household income, such as capital gains, qualified dividends, and capital gains from collectibles, are not considered ordinary income; instead, they are taxed at different rates.

How Is Ordinary Income Taxed?

All sources of ordinary income are added together, and then all allowable deductions are subtracted from this total. What remains is subject to tax using tax brackets and the IRS tax tables.

For tax year 2022, the income brackets and thresholds were as follows:

  • 10% for income of $10,275 or less ($20,550 for married couples filing jointly)
  • 12% for incomes over $10,275 ($20,550 for married couples filing jointly)
  • 22% for incomes over $41,775 ($83,550 for married couples filing jointly)
  • 24% for incomes over $89,075 ($178,150 for married couples filing jointly)
  • 32% for incomes over $170,050 ($340,100 for married couples filing jointly)
  • 35% for incomes over $215,950 ($431,900 for married couples filing jointly)
  • 37% for income over $539,900 ($647,850 for married couples filing jointly)

For 2023, the figures are:

  • 10% for income of $11,000 or less ($22,000 for married couples filing jointly)
  • 12% for incomes over $11,000 ($22,000 for married couples filing jointly)
  • 22% for incomes over $44,725 ($89,450 for married couples filing jointly)
  • 24% for incomes over $95,375 ($190,750 for married couples filing jointly)
  • 32% for incomes over $182,100 ($364,200 for married couples filing jointly)
  • 35% for incomes over $231,250 ($462,500 for married couples filing jointly)
  • 37% for income over $578,125 ($693,750 for married couples filing jointly)

States That Tax Social Security Benefits

Most states do not tax Social Security benefits, but 11 do under certain circumstances. They are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont.

Connecticut exempts Social Security benefits if you are a single filer with an income of less than $75,000. If you are married filing jointly, the exemption is $100,000 before benefits are taxed.

Kansas fully exempts benefits, regardless of filing status, if your federal adjusted gross income is less than $75,000.

In Missouri, benefits are exempt for beneficiaries 62 and older if their income is less than $85,000, or $100,000 if married filing jointly.

Colorado excludes some pension and annuity payments from income taxes, including Social Security benefits. Residents at least 55 years old can exclude up to $20,000, while those who have reached the age of 65 can exclude $24,000.

Utah offers a non-refundable tax credit of up to $450 against retirement income. The credit phases out at $25,000 for single filers and $32,000 for married couples filing jointly.

New Mexico recently changed its laws. Most seniors will be exempt from paying taxes on their benefits. This applies to those with an adjusted gross income of less than $100,000 for an individual, $150,000 for a couple filing jointly, and $75,000 for married couples filing separately.

How Much of My Social Security Income Is Taxable?

If filing as an individual, and your combined income is between $25,000 and $34,000, you may be required to pay income tax on up to 50% of your Social Security benefits. If you earn more than $34,000, you may be liable for income tax up to 85% of your benefits.

At What Age Is Social Security No Longer Taxable?

There is no age at which Social Security is no longer taxable. Social Security will always be taxable depending on the income you earn in retirement.

Does Everyone Pay the Same Rate for Social Security Tax?

Yes, everyone pays the same rate for Social Security tax. The Social Security tax is 12.4%, half of which is paid by the employee (6.2%) and half by the employer (6.2%). If you are self-employed, you must pay the full 12.4%. All taxpayers only pay SS tax up to an income of $160,200 in 2023. Income after that is not taxed for Social Security.

The Bottom Line

You may be subject to tax on your Social Security income depending on your tax bracket, which is based on the income you earn. Your Social Security income will be combined with your other taxable income to determine if your Social Security benefits will be taxable. You may be subject to income tax on up to 85% of your Social Security benefits.

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  2. Internal Revenue Service. "Form 1040," Page 1.

  3. Internal Revenue Service. "Publication 915, Social Security and Equivalent Railroad Retirement Benefits."

  4. Internal Revenue Service. "What Is Taxable and Nontaxable Income?"

  5. Internal Revenue Service. "Are Social Security Benefits Taxable?"

  6. Internal Revenue Service. "Topic No. 404 Dividends."

  7. Internal Revenue Service. "Topic No. 409 Capital Gains and Losses."

  8. Internal Revenue Service. "IRS Provides Tax Inflation Adjustments for Tax Year 2022."

  9. Internal Revenue Service. "IRS Provides Tax Inflation Adjustments for Tax Year 2023."

  10. AARP. "Which States Tax Social Security Benefits?"

  11. Office of Legislative Research. "Income Tax Deductions for Retirement Income."

  12. Kansas Department of Revenue. "Frequently Asked Questions About Individual Income."

  13. Missouri Department of Revenue. "Pension Exemption and Social Security/Social Security Disability Deduction."

  14. Colorado Department of Revenue. "Individual Income Tax | Information for Retirees."

  15. Utah State Legislature. "Utah Code. Title 59. Chapter 10. Part 10. Section 1019. Definitions -- Nonrefundable retirement tax credits."

  16. Taxation Revenue New Mexico. "Social Security Income Tax Exemption."

  17. AARP. "Are Social Security Benefits Taxable Regardless of Age?"

  18. Social Security Administration. "How Is Social Security Financed?"