A Taxing Time, Indeed: How Your Social Security Benefits Might Be Taxable

One lament of the newly-retired person is the realization that although their careers might have ended, their tax liabilities continue unabated. Among the most surprising taxes is the tax on Social Security benefits. How much will they be? Let’s take a closer look.

Social Security payments have been subject to taxation above certain income limits since 1983. No inflation adjustments have been made to those limits since then, so most people who receive Social Security benefits and have other sources of income pay some taxes on the benefits. However, regardless of income, no taxpayer has all their Social Security benefits taxed. The top level is 85% of the total benefit. Here’s how the IRS calculates how much is taxable:

  • The calculation begins with your adjusted gross income (AGI) from Social Security and all other sources. That may include wages, self-employed earnings, interest, dividends, required minimum distributions (RMDs) from qualified retirement accounts, and other taxable income.
  • Tax-exempt interest is then added. (It isn’t taxed, but it goes into the calculation.)

Then, apply the figure to these rates (effective for 2023):


  • From $25,000 to $34,000: You may have to pay income tax on up to 50% of your benefits.
  • More than $34,000:Up to 85% of your benefits may be taxable.


  • From $32,000 to $44,000:You may have to pay income tax on up to 50% of your benefits.
  • More than $44,000: Up to 85% of your benefits may be taxable.

To be clear (and we get this question a lot) - this does not mean that you lose 50%-85% of your Social Security benefits. It means above a certain income level, that a portion of your Social Security benefits are taxable.

So, will you pay taxes on your Social Security benefits? Maybe. 0% might be taxable. A maximum of 85% might be taxable. Unfortunately, this is just in relation to federal tax, so depending on where you live, you may also have to pay state income taxes. The bottom line: retirement might bring many changes to your life, but paying taxes will remain a stubborn part of retirement.

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice. Any views expressed herein are those of the author(s) and not necessarily those of Multnomah Group or Multnomah Group’s client.

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