Federal Tax on SS

[Semi-Retyrd]

Thank you to EVERYONE who posted...I'm am much more educated with the process and why things are the way they are. Quick follow up: Do most of you have fed taxes taken out of your SS payment automatically? Or do you make "educated guess" payments throughout the year? Or just pay when you file? Does one have any advantage over the other?

I suggest you use a tax calculator like the one from Dinkytown. See -

1040 Tax Calculator

Use this 1040 tax calculator to help estimate your tax bill for the current tax year's rates and rules.

www.dinkytown.net

Note this is for tax year 2025 and can be helpful if you haven't yet done your taxes for that year. They will release the calculator for 2026 probably in late April.

These calculators automatically compute the taxable portion of SS as part of your total tax calculation.

In your case it appears you do not have an IRA or a 401(k), or a Roth. So you do not need to be concerned about RMDs or Roth conversions.

When you finally do collect SS benefits, you could increase the withholding from your military pension to cover the taxable portion of your SS benefits.

In my case I have no tax withheld from my SS benefits and simply make quarterly estimated tax payments which total my previous year's tax for safe harbor considerations (no guessing required). Then if my tax for the current year is higher (it usually is), I simply pay the extra on April 15 of the following year. I consider any extra paid on April 15 as an interest free loan from the IRS for which I thank them.

You could also make estimated tax payments as an alternative and stop all withholding from your military pension.

I hope these suggestions are helpful.

Cheers Dennis

 

[Montecfo]

The $6000 deduction and elimination of WEP/GPO both added another strain to the SS system.

You are correct about the WEP/GPO.. But the 6000/12000 old age deduction has no effect on the SS trust fund. It is just like any other new tax deduction. Describing it as related to SS was more of a marketing thing.

 

[USGrant1962]

You are correct about the WEP/GPO.. But the 6000/12000 old age deduction has no effect on the SS trust fund. It is just like any other new tax deduction. Describing it as related to SS was more of a marketing thing.

It actually does slightly reduce taxes directed to SSDI through a secondary effect. The deduction reduces the overall tax owed, and in so doing also reduces the portion attributed to "tax on social security" that goes to SSA.

 

[Montecfo]

It actually does slightly reduce taxes directed to SSDI through a secondary effect. The deduction reduces the overall tax owed, and in so doing also reduces the portion attributed to "tax on social security" that goes to SSA.

And in that way it is just like any other new tax deduction.

 

[pb4uski]

It actually does slightly reduce taxes directed to SSDI through a secondary effect. The deduction reduces the overall tax owed, and in so doing also reduces the portion attributed to "tax on social security" that goes to SSA.

This. The IRS does a calculation of the tax with and without social security income and the difference in tax is transferred to social security.

 

[TheWizard]

The $6000 deduction and elimination of WEP/GPO both added another strain to the SS system.

Basically correct, although that $6000 deduction applies even to older folks who don't get SS benefits for one reason or another...

 

[pb4uski]

And also to people 65+ who are not yet collecting SS... but excludes those 62-64 who are collecting SS.

Ready. Fire. Aim.

 

[RetiredHappy]

We are both collecting SS but don't get any additional OBBB $6k/$12k deductions but it does not bother us one bit.

 

[audreyh1]

We are both collecting SS but don't get any additional OBBB $6k/$12k deductions but it does not bother us one bit.

You are in that upper 12%.

 

[CRLLS]

Sorry to confuse.. its really simple.

We take our guesstimate out of our Fidelity account. Fidelity allows a max of 99% for a distribution to be taken in taxes.

We also have money at Vanguard that we take distributions from but have zero taxes withheld from those funds.

One minor correction. the 99% maximum is true if you do it online. If you call, the reps will do 100%. I've done it several times/years.

 

[GenXguy]

You are correct about the WEP/GPO.. But the 6000/12000 old age deduction has no effect on the SS trust fund. It is just like any other new tax deduction. Describing it as related to SS was more of a marketing thing.

No, ChatGPT agreed with me.

You are correct that the new senior deduction has a significant impact on the
Social Security Trust Fund. While the law doesn't change the payroll tax rate, it reduces the amount of income tax collected on Social Security benefits—revenue that is normally deposited directly into the trust funds.

 

[pb4uski]

You are correct about the WEP/GPO.. But the 6000/12000 old age deduction has no effect on the SS trust fund. It is just like any other new tax deduction. Describing it as related to SS was more of a marketing thing.

I thought the same... that the new 65+ deduction would not impact the SS Trust Fund but it actually does since the IRS calculates income taxes with and without SS and the difference is transferred to the SS Trust Fund up to the amount of the tax. Example below:

Tax Component​	Without 65+ Deduction​	With 65+ Deduction (OBBBA)​	Difference​
A. Calculation WITH Social Security​	​	​	​
1. Pension Income​	30,000​	30,000​	0​
2. Total Social Security​	24,000​	24,000​	0​
3. Taxable Social Security​	11,450​	11,450​	0​
4. Adjusted Gross Income (AGI)​	41,450​	41,450​	0​
5. Standard Deduction (Base)​	-15,750​	-15,750​	0​
6. Over 65 Standard Deduction​	-2,000​	-2,000​	0​
7. 65+ Deduction (OBBBA)​	0​	-6,000​	-6,000​
8. Taxable Income​	23,700​	17,700​	-6,000​
Total Tax Owed (A)​	2,606​	1,886​	-720​
​	​	​	​
B. Calculation WITHOUT Social Security​	​	​	​
1. Pension Income​	30,000​	30,000​	0​
2. Total Social Security​	0​	0​	0​
3. Taxable Social Security​	0​	0​	0​
4. Adjusted Gross Income (AGI)​	30,000​	30,000​	0​
5. Standard Deduction (Base)​	-15,750​	-15,750​	0​
6. Over 65 Standard Deduction​	-2,000​	-2,000​	0​
7. 65+ Deduction (OBBBA)​	0​	-6,000​	-6,000​
8. Taxable Income​	12,250​	6,250​	-6,000​
Total Tax Owed (B)​	1,228​	625​	-603​
​	​	​	​
Revenue to SS Trust Fund (A - B)​	1,378​	1,261​	-117​

 

[Montecfo]

I thought the same... that the new 65+ deduction would not impact the SS Trust Fund but it actually does since the IRS calculates income taxes with and without SS and the difference is transferred to the SS Trust Fund up to the amount of the tax. Example below:

It did not affect it in a unique way though. The larger standard deduction and other rate changes would do this also. MOST provisions which reduce taxes could have this indirect affect.

When the poster I was responding to made his statement, it seemed to suggest a unique direct link,.which is not the case.

But as far as the indirect effect, I stand corrected.

 

[USGrant1962]

It did not affect it in a unique way.

But it does in that it majorly applies to SS recipients, which is not the case for any random tax deduction.

 

[Montecfo]

But it does in that it majorly applies to SS recipients, which is not the case for any random tax deduction.

It is not at all unique to SS recipients. It doesn't apply solely or exclusively to SS recipients as WEP/GPO do. It would not apply to SS recipients under 65 nor to those over the income thresholds since it phases out.

By contrast, increases to the standard deduction apply to all SS recipients and have the same indirect effect on taxes driven by SS and they do not phase out as income rises. Reductions in tax rates also apply to all SS recipients and do the same thing. So do increases in the regular over 65 deduction which also does not phase out. None of these were cited for some reason even though they either do the same thing or affect more SS recipients.

In truth, most changes to the tax code affecting individual taxpayers can affect the taxes attributable to SS. Even "random" deductions as long as they are not unavailable to SS recipients for some reason.

 

[GenXguy]

When the poster I was responding to made his statement, it seemed to suggest a unique direct link,.which is not the case.

But as far as the indirect effect, I stand corrected.

If you read my post, you will see I was responding to this post Federal Tax on SS which had mentioned the senior deduction, and I added that the recent change regarding WEP/GPO was a strain on the SS system.

None of these were cited for some reason even though they either do the same thing or affect more SS recipients.

Because, if you followed the thread and post I responded to, it was talking about the senior deduction being a strain. Federal Tax on SS

There are also other strains on the SS system that weren't mentioned, like spousal benefits.

 

[lakehawk]

I FIRE'd in June of 2025 (55 y/o & file single). $1.2M net worth and two monthly pensions (Military - $2,852 post tax & VA - $2,102 tax free). I was doing some "pre-planning" today regarding SS, and when I should start taking it. It was then I discovered that SS is taxed if your "income" is above certain thresholds. In all my years of fiscal research, I never knew about this. Go figure. With that, I have a couple of questions.

Are the threshold amounts that are used to decide what percentage of your SS is taxed based on AGI? Or taxable income?

If AGI is the answer, I think that's horses***. You base SS taxation on AGI, but yet I can't contribute to a Roth IRA because my pension income is not "earned"?! I guess I'm just frustrated at the double-standard. Or maybe I'm just making an apples-to-oranges comparison since I'm perturbed. Either way, I'm in a pretty good position, so I guess I shouldn't complain

If the VA payment is for disability, that amount generally is not reported on the 1040. When you start SS, you take half that benefit and add it to your military pension and other investment income. Since that may put you over $44000, then up to 85% of your SS would be taxable. However, after a standard deduction of about 17000, you should be in a lower tax bracket Probably around 12% in today's tax brackets. Keep in mind that everything may change in the future.

 

[GenXguy]

If the VA payment is for disability, that amount generally is not reported on the 1040. When you start SS, you take half that benefit and add it to your military pension and other investment income. Since that may put you over $44000, then up to 85% of your SS would be taxable. However, after a standard deduction of about 17000, you should be in a lower tax bracket Probably around 12% in today's tax brackets. Keep in mind that everything may change in the future.

That threshold for "single" is $34,000. $44,000 is for married filing jointly.

 

[HappilyRetired]

Agree, agree, agree.... When I first heard this I was ecstatic. (well pleasantly surprised) but then I read the details. Can't trust anything anyone says anymore. Why not say something like, for many more, their SS won 't be taxed.

Again, those of us with a few extra dollars carry more of the burden.

Pres Trump tried to pass in the senate “No tax on SS” but it never passed. So he slipped in the BBBill a deduction of $6,000 per person to help compensate for SS taxes. It isn’t what he wanted for Seniors but it was better than nothing. Foe married filing, it is $12,000 deduction even if you do not itemize. Quite a great deduction for us!

 

[Al18]

For a married couple that’s 65 or older to get the $12,000 deduction, their AGI must be $150K or less, or the deduction is reduced.

 

[pb4uski]

Pres Trump tried to pass in the senate “No tax on SS” but it never passed. ...

^^^ That is incorrect. A bill for no tax on SS was never introduced in Congress and therefore was never voted on.

"No tax on SS" was a Trump campaign "promise" but no such legislation was proposed even though the GOP controls the White House, the House and the Senate. They didn't even try. I find it hard to believe that they could not have rounded up 10 Democratic Senate votes if they had tried.

This temporary 65+ deduction was the next best thing because it could be included in reconciliation. Under Senate rules, you cannot use the 51-vote reconciliation process to make changes to Social Security. The Senate Parliamentarian would have blocked any attempt to permanently repeal the Social Security tax because it affects the program's trust funds directly so what they did was a stop-gap but it sunsets after 2028.

 

[TheWizard]

For a married couple that’s 65 or older to get the $12,000 deduction, their AGI must be $150K or less, or the deduction is reduced.

My AGI, filing single, is well over $150K, so zilch for me on that.
At least I was able to itemize my full SALT this time around...

 

[GenXguy]

For a married couple that’s 65 or older to get the $12,000 deduction, their AGI must be $150K or less, or the deduction is reduced.

It's a lot worse for someone who is single.

 

[lakehawk]

That threshold for "single" is $34,000. $44,000 is for married filing jointly.

Yes, you are right.

Thanks.

.

 

[lakehawk]

If the VA payment is for disability, that amount generally is not reported on the 1040. When you start SS, you take half that benefit and add it to your military pension and other investment income. Since that may put you over $44000, then up to 85% of your SS would be taxable. However, after a standard deduction of about 17000, you should be in a lower tax bracket Probably around 12% in today's tax brackets. Keep in mind that everything may change in the future.

{Correction} Since you are single, change that $44,000 to 34,000.