Many retirees are surprised to learn that Social Security benefits can be taxable at the federal level. Whether yours are -- and how much -- depends on a figure called "combined income," which the IRS uses to determine how much of your benefit to include in taxable income. The income thresholds that trigger taxation have not been adjusted for inflation since 1984 and 1993, which means more retirees cross them each year as benefit amounts rise with cost-of-living adjustments.
What Is "Combined Income"?
Combined income is the IRS's specific formula for measuring total income when calculating Social Security taxation. It is not the same as AGI or total income on your tax return:
Combined Income = Adjusted Gross Income + Nontaxable Interest + 50% of Social Security Benefits
An important nuance: tax-exempt municipal bond interest is included in combined income even though it does not appear in your AGI. This surprises many retirees who hold municipal bonds specifically to reduce their taxable income -- the bonds still push up combined income and can make more of their Social Security taxable.
The Three Tiers: 0%, 50%, and 85% Taxable
Based on combined income and filing status, up to 85% of your Social Security benefits may be included in taxable income. Note that 85% is the maximum -- you are never taxed on more than 85% of your benefit, regardless of income level.
A Worked Dollar Example
You are single, receive $24,000 in Social Security benefits, and have $18,000 in IRA withdrawals and $2,000 in interest income.
- AGI: $20,000 (IRA withdrawals + interest)
- Nontaxable interest: $0
- 50% of Social Security: $12,000
- Combined income: $20,000 + $0 + $12,000 = $32,000 -- in the 50% tier
- Taxable SS = lesser of: 50% of benefits ($12,000) OR 50% of combined income over $25,000 ($3,500)
- $3,500 of your Social Security benefit is included in taxable income
At a 12% marginal rate, that $3,500 adds $420 to your tax bill. If your combined income were $40,000 instead, you would be in the 85% tier and the calculation becomes more complex -- up to $20,400 of your $24,000 benefit could be taxable.
Why the Thresholds Are a Trap
The $25,000/$32,000 thresholds were set in 1984 and the $34,000/$44,000 thresholds in 1993. Neither has ever been indexed for inflation. A retiree in 1984 needed substantial income to cross the 50% threshold. Today, a retiree with a modest IRA and average Social Security benefit frequently crosses it. The Social Security Administration's annual cost-of-living adjustments (COLAs) push more retirees into taxable territory each year without Congress changing any law.
Planning Strategies to Reduce Taxation
Because combined income is the key variable, strategies that reduce it can protect a larger share of your Social Security from tax:
- Roth conversions before claiming Social Security: Converting pre-tax IRA funds to Roth in years before you claim SS reduces future required minimum distributions (RMDs), which would otherwise add to combined income. The conversion itself is taxable in the year it occurs, so timing matters.
- Qualified Charitable Distributions (QCDs): If you are 70.5 or older, you can direct up to $105,000 per year (2026) directly from your IRA to a charity. QCDs satisfy your RMD requirement without adding to AGI, which keeps combined income lower.
- Delay claiming Social Security: Every year you delay claiming (up to age 70) increases your monthly benefit by approximately 8%. Delaying also compresses the period during which you draw both a high SS benefit and large IRA withdrawals simultaneously.
- Coordinate IRA withdrawals: In years before Social Security begins, drawing down pre-tax IRAs (even if you do not need the money) at lower tax rates can reduce the future RMD that would otherwise spike combined income.
- HSA spending for medical expenses: Paying qualified medical costs from an HSA rather than from taxable accounts reduces the need for additional withdrawals that would raise combined income.
State Taxes on Social Security
The above analysis covers federal income tax only. At the state level, the picture is more favorable: the majority of states do not tax Social Security benefits at all. A smaller number of states tax Social Security to varying degrees, some with income-based exemptions. Check your state income tax calculator for state-specific information on how your state treats Social Security income.
Source
IRS Publication 915 (Social Security and Equivalent Railroad Retirement Benefits); IRS Publication 554 (Tax Guide for Seniors); Social Security Administration OASDI Fact Sheet 2026.
How Social Security Benefits Interact With IRA Withdrawals
One of the most consequential retirement tax planning decisions is managing the timing of IRA withdrawals relative to Social Security claiming. Because IRA withdrawals count directly toward combined income, taking large withdrawals in years when you are also receiving Social Security can push you into the 85% taxable tier quickly.
A common scenario: a retired couple with $40,000 in annual Social Security benefits and $30,000 in IRA withdrawals. Their combined income is $30,000 AGI + $20,000 (50% of SS) = $50,000 -- well into the 85% tier. Up to $34,000 of their $40,000 in Social Security benefits ($40,000 x 85%) can be included in taxable income. That is a meaningful additional tax bill on income they thought of as partly "tax-free."
Contrast this with a couple who delayed Social Security to age 70 and drew down pre-tax IRAs heavily in ages 62-69. They paid tax on IRA withdrawals at lower rates during those years, reduced future RMDs, and when they finally claimed Social Security, their IRA balances were smaller -- resulting in lower combined income and less taxation of their SS benefit.
The Effective Marginal Rate Trap ("Tax Torpedo")
When combined income moves through the 50% and 85% thresholds, the effective marginal tax rate on each additional dollar of income spikes temporarily. Each additional $1 of income not only gets taxed at your marginal bracket rate, it also makes an additional 50 cents of Social Security taxable, which gets taxed again at the same rate. The result is an effective marginal rate of 1.5x your stated bracket rate through these transition zones -- sometimes called the "tax torpedo." For a retiree in the 22% bracket, the effective marginal rate through the phase-in zone can reach 33%. This is why Roth conversions and QCDs done before or around Social Security claiming can be especially valuable for managing lifetime tax exposure.
Will Social Security Taxation Rules Change?
There have been recurring legislative proposals to adjust or eliminate the taxation of Social Security benefits, including provisions in major tax legislation debated in 2025. The One Big Beautiful Bill Act included a temporary deduction for senior citizens intended to offset Social Security taxation for lower-income retirees. As of mid-2026, check current IRS guidance for any enacted changes that may affect your 2026 return. The combined income thresholds themselves remain unchanged under current law.
Married Couples and the "Widow's Penalty"
Married couples filing jointly benefit from higher combined income thresholds for Social Security taxation ($32,000 and $44,000) compared to single filers ($25,000 and $34,000). However, when one spouse dies and the survivor files as a single taxpayer, they face the lower single-filer thresholds while often still receiving the same level of Social Security benefits and portfolio income. This transition -- sometimes called the "widow's penalty" or "widow's tax" -- can significantly increase a surviving spouse's tax burden in the year following the death. Planning for this scenario in advance, through Roth conversions and other income-timing strategies, is a standard component of retirement tax planning for couples.