Federal Tax on SS

[imnontrad]

Most likely 85% of your SS will be subject to income tax at whatever your tax rate is. The reason it is 85% taxabl;e and not 100% is that the 15% is considered to be a return of what you paid in (and already paid taxes on).
Your SS benefit can continue to increase until age 70. You might consider it a bond-like or annuity-like asset.
I have a military pension also and I waited until 70 to start SS. It allowed me more time to make Roth conversions.

 

[GenXguy]

Most likely 85% of your SS will be subject to income tax at whatever your tax rate is.

For current low income SS recipients, that is NOT most likely. See the formulas mentioned earlier for calculating it.

 

[Flieger]

^^^ 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.

You have to be kidding.

Flieger

 

[old medic]

We are taxed at 85%, But it gives us a 15% window for Roth conversions.

 

[EastWest Gal]

In 1983, Congress passed amendments to the Social Security Act, which allowed for the taxation of Social Security benefits for the first time. This change took effect in 1984.

So this change happened 42 years ago, and is mentioned on every SS statement issued for the past few decades. Don’t know how this could be missed.

This was done because SS would have been insolvent already without it. It is the same legislation that increased the full retirement age to 67, which takes full effect for those born in 1960. In 1993, the income threshold for taxation was adjusted upward for inflation, but they did not do any further ties to increased cost of living. Just like the minimum wage, there has been no adjustment for COL. I live in a state where the minimum wage is still $7.25/hr. Thankfully, the SS benefits amounts are adjusted for COL each year.

 

[MichaelB]

<mod note> Multiple posts getting into partisan politics were removed. Let’s please keep the politics out of the discussion.

 

[Koolau]

For current low income SS recipients, that is NOT most likely. See the formulas mentioned earlier for calculating it.

Not many of our Forum members in those ranks I would guess. If so, they've found ways to lower their other taxable income. For instance If one had been able to convert all tIRAs/401(k)s to Roth IRAs before SS, they could take large sums to live on while not qualifying to pay taxes on SS. Again, still guessing that's very few of our members. If so, they're much better prepared for retirement than I was (from a tax situation).

My FIRE hat is off to those who arranged "low income" and high spending. I know many here have done something similar to qualify for ACA before MC but those numbers are much more favorable than are those for staying below SS taxable limits. YMMV

 

[GenXguy]

Not many of our Forum members in those ranks I would guess.

Yeah, but he didn't say he was referring to only forum members, which he shouldn't be anyway. So I take that as to mean those from the general population as with most things.

 

[Gumby]

I've paid federal tax on 85% of my social security since the day I started collecting (along with some to the state). It's a good problem to have, because it means my income is high.

Just as a point of reference, the average social security per person in 2026 is $2071 per month or $24,852 per year. A couple both collecting would total $49,704 in social security. They will hit the point where they pay tax on 85% of their social security when their total income, including SS, is $111,497. Median US household income in 2026 for a household of two is $90,465.

 

[GenXguy]

This was done because SS would have been insolvent already without it. It is the same legislation that increased the full retirement age to 67, which takes full effect for those born in 1960. In 1993, the income threshold for taxation was adjusted upward for inflation, but they did not do any further ties to increased cost of living.

The income threshold for 50% (of SS being taxable) was NOT adjusted upward for inflation in 1993 or any year prior or since. It's still the same as it was set to in 1983. In 1993, they added a second treshold for 85% (of SS being taxable), which also has not been increased for inflation any year since it was set. Just to clarify, the new threshold being added was NOT an inflation adjustment.

 

[ut2sua]

My FIRE hat is off to those who arranged "low income" and high spending.

There was never any magic. High spending folks (due to HCOL or life-style etc.) do have to pay higher taxes. Even if someone sits on a large amount of $ (so they can claim low income while having high spend rate), that sum came after taxes were paid, and because it was large, the tax rate was most likely high (or very high). It is all a fair game at the end (the progressive tax will get you earlier or later, but that is "fair" in our current tax code). Personally, I am fine with the progressive part of the tax code. Lower income folks do need a break as most younger folks started out having lower income.

 

[GenXguy]

Lower income folks do need a break as most younger folks started out having lower income.

And many old folks, and retired folks, have low income as well. It's not just younger folks.