Taxation of Social Security Benefits

How do you determine how much of your Social Security benefits are subject to taxes? Like most things’ taxation-related, it becomes difficult to follow.

Start by adding half of your Social Security benefits in any given year and add that amount to all your other income — including tax-exempt interest, which is otherwise not taxed by the federal government. This number is known as your “combined income.”

If you’re a single filer and your “combined income” is above $25,000 but below $34,000, you’ll pay taxes on 50% of your Social Security benefits. The same window is $32,000 to $44,000 for joint filers who combine their income and Social Security benefits to come up with their combined income figure. If your combined income is above $34,000 (single filers) or $44,000 (joint filers), then you can expect to pay taxes on 85% of Social Security benefits.

Unfortunately, that’s not the whole picture. 13 U.S. states collect taxes on at least some Social Security income. Minnesota, North Dakota, Vermont and West Virginia follow the same taxation rules as the federal government, so you might find yourself paying state taxes, plus federal taxes, on up to 85% of your benefits. Nebraska, Colorado, New Mexico, Connecticut, Kansas, Rhode Island, Missouri, Utah and Montana are a bit more lenient with deductions and exemptions, but also dip their hand into your Social Security checks.