How Much of Social Security Is Considered Income?
- Aug 10
- 2 min read
Social Security can be an important part of retirement income, but many seniors are unsure how much of it actually counts as taxable income. Understanding how much of Social Security is considered income can help you plan for taxes and avoid surprises when filing your return.
For federal income taxes, Social Security benefits are not automatically 100% taxable. The IRS looks at your combined income, which generally includes your adjusted gross income, tax-exempt interest, and one-half of your Social Security benefits.
How Social Security Benefits May Be Taxed
If you file as an individual and your combined income is above $25,000, part of your Social Security benefits may become taxable. For married couples filing jointly, the threshold is generally $32,000. Depending on your total income, up to 85% of your Social Security benefits can be included as taxable income.
This does not mean you pay an 85% tax rate. It means that as much as 85% of your benefits may be included in the income used to calculate your federal taxes.
When figuring out how much of Social Security is considered income, other sources of income can make a difference. Pension payments, wages, IRA or 401(k) withdrawals, investment income, and tax-exempt interest may increase your combined income and potentially make more of your Social Security taxable.
For Illinois residents, Social Security benefits are generally not taxed by the state, even though part of those benefits may be taxable on your federal return.
Because every household is different, retirees with multiple sources of income may want to review their situation with a qualified tax professional before making large retirement-account withdrawals.
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