You finally made it to retirement. The gold watch is on the dresser, the alarm clock is smashed, and those monthly Social Security checks are finally hitting your bank account. Then, tax season rolls around and you realize the IRS might want a piece of your "leisure" money. It feels like a betrayal. You paid into this system for forty years with after-tax dollars, so why are you being charged again?
Is Social Security federally taxed? Honestly, for about 40% of people, the answer is a frustrating "yes."
But it isn't taxed the way your old salary was. There is a weird, clunky formula the IRS uses to decide if you owe them. If you make just a little bit too much from a part-time job or a 401(k) withdrawal, you trigger a "tax torpedo" that can eat up a huge chunk of your benefits. It’s not just about how much you get from the government; it's about everything else you're doing with your money.
The Magic Formula: Combined Income
The IRS doesn't just look at your Social Security check. They use something called combined income (sometimes referred to as "provisional income"). This is the number that determines your fate.
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Basically, you take your Adjusted Gross Income (AGI)—that’s your wages, interest, and dividends—and you add any nontaxable interest you earned. Then, you add exactly 50% of your Social Security benefits.
That total is your "combined income."
If you’re single and that number is under $25,000, you’re in the clear. You don't pay a dime in federal tax on those benefits. But if you're married and filing jointly, that "free" zone only goes up to $32,000.
Think about that for a second. Those thresholds haven't been adjusted for inflation since 1983. Back then, a gallon of gas was $1.16. Because these numbers are frozen in time, more and more retirees find themselves owing taxes every single year just because the cost of living went up.
The Three Tiers of Taxation
Federal taxes on Social Security aren't "all or nothing." It’s a sliding scale. Depending on your filing status and that combined income formula, you’ll fall into one of three buckets.
Single, Head of Household, or Qualifying Widow(er)
- Combined Income under $25,000: You pay $0 in federal tax on your benefits.
- Combined Income between $25,000 and $34,000: You might have to pay income tax on up to 50% of your benefits.
- Combined Income more than $34,000: Up to 85% of your benefits can be taxed.
Married Filing Jointly
- Combined Income under $32,000: No federal tax.
- Combined Income between $32,000 and $44,000: Up to 50% of benefits are taxable.
- Combined Income more than $44,000: Up to 85% of benefits are taxable.
Wait. Let’s be clear about one thing: the IRS isn't taking 85% of your money. That would be insane. They are saying that 85% of your benefit counts as taxable income. You then pay your regular tax rate (10%, 12%, 22%, etc.) on that portion.
Why 2026 is a Weird Year for Taxes
We are currently in a shifting landscape. For the 2026 tax year, the standard deduction has increased slightly to $16,100 for singles and $32,200 for joint filers. There's also a newer "Senior Deduction" that allows folks over 65 to shield an extra $6,000 ($12,000 for couples) from taxes, though this phases out if you're making big money—over $75,000 for individuals.
There has also been a lot of noise in Congress about the "You Earned It, You Keep It Act." This bill wants to scrap federal taxes on Social Security entirely. As of right now, it hasn't passed. It's still a "maybe." Until it becomes law, you have to assume the old rules apply.
The State Tax Wildcard
While the federal government is pretty strict, the states are actually getting nicer.
As of 2026, the vast majority of states—42 of them, plus D.C.—do not tax Social Security. West Virginia just finished phasing out its tax this year. If you live in Florida, Texas, or Nevada, you’re already used to no state income tax. But even states like Missouri and Nebraska have recently joined the "hands off my Social Security" club.
Only eight holdouts remain:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
Even in these eight states, most middle-income retirees don't pay. For example, in New Mexico, you generally aren't taxed on benefits unless you're making over $100,000 as a single person.
Strategies to Keep the IRS Away
You aren't totally helpless here. There are a few ways to lower that "combined income" figure so you stay under the thresholds.
Use your Roth IRA. Withdrawals from a Roth IRA are tax-free and—this is the big one—they do not count toward your combined income. If you need an extra $10,000 for a vacation, taking it from a Roth won't make your Social Security taxable. Taking it from a traditional IRA might.
Watch your RMDs.
Once you hit age 73 (or 75, depending on your birth year), the government forces you to take money out of your traditional IRAs. These Required Minimum Distributions (RMDs) can spike your income and trigger the 85% tax tier on your Social Security.
Give it away (strategically).
If you don't need your RMD money, you can do a Qualified Charitable Distribution (QCD). You send the money directly from your IRA to a charity. The money never hits your bank account, so it doesn't count as income, and it keeps your Social Security tax-free.
What You Should Do Now
If you think you’re going to owe, don't wait until April to find out.
You can actually ask the Social Security Administration to withhold taxes from your monthly check. It’s called Form W-4V. You can choose to have 7%, 10%, 12%, or 22% taken out. It hurts to see a smaller check, but it hurts way less than a surprise $4,000 bill from the IRS next spring.
Check your "combined income" today by adding up your expected pension, 401(k) withdrawals, and half of your Social Security. If you are hovering right near the $25,000 or $32,000 mark, talk to a tax pro about shifting where you take your income from this year. A small move now could save you thousands in "double taxation" later.