Social Security has been a central source of retirement income since its inception in 1935. However, many retirees who rely on this safety net are unaware that it could be taxed. Understanding when and how Social Security benefits may be taxed is crucial to effective retirement planning. Knowing the rules will keep you ahead of the game and help ensure that you and your family are prepared during tax season.
Below, we’ll take a deep dive into the taxability of Social Security benefits, help you understand how the IRS determines its threshold, look into the concept of provisional income, and discuss which states impose an additional tax.
When do you pay taxes on Social Security?
While some refer to the tax as the eighty-five percent trap, it’s helpful to know that the federal code is designed to ensure that the taxation of benefits is fair across the board. The system is designed for those with modest incomes to keep their benefits untaxed. Given this, your Social Security benefits are taxed based on your total combined income, also known as your provisional income, which includes your:
- Taxable income (wages, self-employment earnings, interest, dividends, capital gains, IRA and pension distributions, rental income, and other income that must be reported to the IRS).
- Nontaxable income (interest from municipal bonds, bonds issued by U.S. territories, interest from Series EE and Series I U.S. savings bonds, etc.).
- 50% of your total annual Social Security benefits.
If your provisional income surpasses the IRS’s threshold ($25,000 for single filers or $32,000 for couples filing jointly), you’ll have to pay taxes on a portion of your Social Security. Let’s take a closer look at the thresholds for different income levels.
IRS income thresholds for 2025
Unlike many of the IRS thresholds, the thresholds governing the taxable portion of your Social Security benefits do not adjust annually for inflation. For 2025, here’s what you need to know:
| Filing status | Provisional income range | Taxable portion of benefits |
| Single, head of household, qualifying widow(er), or married filing separately and living apart for the entire year | $25,000–$34,000 | Up to 50% taxable |
| Above $34,000 | Up to 85% taxable | |
| Married filing jointly | $32,000–$44,000 | Up to 50% taxable |
| Above $44,000 | Up to 85% taxable | |
| Married filing separately and living with spouse at any time during the year | Any income level | Up to 85% taxable |
Example
Alice is a 74-year-old retiree who has been widowed since 2022 and lives in Maryland. In 2025, she received income from the following sources:
- $1,000 from dividends.
- $30,000 from rental income.
- $7,000 from an IRA.
- $500 from a municipal bond.
- $18,000 from Social Security.
For 2025, Alice’s provisional income is:
$38,000 (AGI) + $500 (nontaxable interest) + $9,000 (50% of Social Security benefits) = $47,500
Since Alice is widowed, she would file as a single filer. This means her income would exceed the $34,000 threshold for single filers, and up to 85% of her Social Security could be taxable.
How states tax Social Security benefits
Although there is uniformity in the taxation of benefits at the federal level, state taxation varies in its treatment. Most states do not tax the benefit, but a minority of states do. Given this, in 2025, you can expect to be taxed in the following states:
- Colorado.
- Connecticut.
- Minnesota.
- Montana.
- New Mexico.
- Rhode Island.
- Utah.
- Vermont.
- West Virginia.
While this handful of states taxes your benefit, many offer income- and age-related exclusions. Since state laws vary, if you live in any of the states that tax Social Security, you’ll need to work with your tax consultant to determine your eligibility.
Social Security is a safety net for many seniors, but understanding the interplay between state and federal tax laws is crucial. As a retiree, it’s essential to know how your provisional income affects your tax exposure, allowing you to plan effectively. By including your benefits as part of your tax and financial planning, you can preserve more of your income and maintain economic stability during your golden years.
This information is for educational purposes and is not legal, financial, tax, or investment advice. It should not be substituted for information from professionals authorized to practice in your area. You should always consult a suitably qualified professional regarding your specific situation.
