By Edward Cates, Chairman, TSCL
It’s already February, which means that this year’s tax deadline of April 15 is just a few short weeks away. For many Social Security recipients, especially people who have just started claiming their benefits, it adds yet another layer of complexity to figuring out how much you owe the government—or conversely, how much it owes you.
How do Social Security Payments Interact with Income Taxes?
It’s possible to pay income taxes on up to 85 percent of your Social Security benefits, but many people don’t pay any taxes at all on their benefits. Where you end up depends on your earnings and how you file your taxes, single or jointly.
To understand whether you’ll need to pay taxes on your benefits, it’s important to first understand the concept of combined income. For Social Security beneficiaries, your combined income is 50 percent of your benefit amount plus any other earned income. For example, if you earned $24,000 in Social Security benefits for 2024 and an additional $30,000 from your 401(k) withdrawals, your combined income would be $42,000.
Once you have your combined benefit amount, you can use it to find out how much you’ll pay in Social Security taxes. If you file taxes as an individual, you’ll pay taxes on 50 percent of your benefits if your combined income exceeds $25,000. That number increases to 85 percent if your combined income exceeds $34,000. If you file as a couple, the threshold to pay taxes on 50 percent of your benefits is $32,000, and the threshold to pay taxes on 85 percent of your benefits is $44,000.
To see how much of your benefits are taxable, you can turn to several online calculators. TheFinanceBuff.com, for example, provides a free one.
Potential Changes to Taxes on Your Benefits
If the thresholds for paying taxes on your benefits seem outdated, that’s because they are. They were introduced in 1984, which is more than 40 years ago now. According to the Census Bureau, the median U.S. household income at the time was $26,430. That’s less than a third of the median household’s income of $80,610 in 2023, the last year for which data is available at the time of this writing.
The reality is that the government’s failure to update these thresholds is egregious and that seniors should be paying far less taxes on their benefits. If we adjusted the 1984 thresholds to 2023 dollars, people filing taxes as individuals wouldn’t start paying taxes on their benefits until their combined income reached about $76,000. For people filing jointly, that figure would be about $98,600.
It's no surprise that seniors overwhelmingly support updating these income thresholds. Among 997 respondents to TSCL’s 2025 Senior Survey, 30 percent support providing a one-time adjustment to catch the thresholds up to today’s dollars. Then, to solve the problem long-term, 73 percent support implementing an annual adjustment that helps them keep pace with future inflation.
At TSCL, we strongly support both changes and will fight to get them done. As you probably read earlier this year, we worked hard to help push the Social Security Fairness Act through Congress before former President Biden signed it on January 5. Moving forward, we’ll continue pushing for similar bills that fix challenges for seniors like unfair taxation.
