How much of your Social Security income is taxable? Depending on your filing status and combined income, up to 85% of your benefits may be included in your taxable income.
This does not mean your benefits are taxed at an 85% tax rate. It means as much as 85% of the Social Security benefits you receive could be subject to your applicable federal income-tax rate.
Your combined income generally includes:
- Your adjusted gross income
- Tax-exempt interest
- One-half of your Social Security benefits
This is why your retirement withdrawal plan matters. Required minimum distributions, or RMDs, from traditional retirement accounts can increase your income and potentially make more of your Social Security taxable. Traditional IRA withdrawals, 401(k) distributions, investment income, pension payments, and Roth conversions may also affect the calculation.
Coordinating when you claim Social Security, complete Roth conversions, withdraw from retirement accounts, and begin RMDs may help you manage taxable income throughout retirement. However, the most suitable strategy depends on your accounts, filing status, tax bracket, and income needs.
Use the official IRS guidance on Social Security taxation or consult a qualified tax professional to assess your circumstances.
This content is for educational purposes only and does not constitute individualized financial, investment, or tax advice.
If this is your first time with me, I’m Elizabeth.
I’ve been working with retirees and hopeful retirees for almost 20 years – helping individuals and families make confident financial decisions so they can focus on living the life they’ve worked so hard to build. My focus is retirement income planning, helping people transition from saving for retirement to creating predictable, sustainable income throughout retirement.
