Millions of older Americans live solely on a Social Security check. And while other Americans rely mostly on workplace retirement plans like a401(k) or an individual retirement account (IRA), these monthly benefits from the government can make or break your retirement.Let’s take a look at how your Social Security is taxed after age 70.
For more help figuring out how Social Security will fit into your personal retirement planning journey, consider working with a financial advisor.
Social Security, Defined
Social Security is a government program created in 1935 as a part of President Franklin Delano Roosevelt’s New Deal, a series of programs designed to fight the Great Depression. Social Security is considered by most people to be the cornerstone of America’s social safety net. Social Security sends monthly checks to Americans who have reached retirement age, currently set at 67.
The amount of money you get each month depends on how much money you earned during your career and how old you were when you retired. The program is funded by Social Security taxes taken out of each American worker’s paychecks. The average monthly check as of July 2023 is for $1,790.56, and the maximum check for a person retiring in 2023 at age 70 is $4,555.
Social Security and Federal Taxes
Even though Social Security money comes directly from the federal government, some of it will be going back to Uncle Sam in the form of federal income taxes. Social Security is treated as regular income for the purpose of taxes. There is a formula to determine how much of your Social Security check will be taxed, but essentially half of it as counted as combined income, along with other forms of retirement income. Depending on your total combined income, up to 85% of that half will be taxed.
Is Social Security Taxable After Age 70?
Though there are some rumors on the internet that the government stops taxing Social Security payments once you reach a certain age, such as 70, this is simply not true. Social Security payments are taxable from the moment you start receiving them until you die.
Social Security and State Taxes
Some of the confusion over the tax status of Social Security payments likely comes from the fact that each state treats Social Security differently.Many states treat Social Security the same way the federal government does, taxing every dollar of it based on the bracket you slot into with your full retirement income. This means that your Social Security check will be taxed twice – once by the federal government and once by your state.
Other states only partially tax Social Security. They might only tax 50% of it, or have some other formula for determining exactly how much of your monthly check is subject to state taxes.
Finally, some states don’t tax Social Security at all. For some of these states it is a special carveout, and for others it is simply because there is no state income tax, so none of your retirement income will be subject to any state tax.
Bottom Line
Yes, Social Security is taxed federally after the age of 70. If you get a Social Security check, it will always be part of your taxable income, regardless of your age. There is some variation at the state level, though, so make sure to check the laws for the state where you live.
Retirement Tax Tips
- A financial advisor can help you keep inline with all retirement tax rules. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Determine your total tax burden by using SmartAsset’s free income tax calculator.
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FAQs
Social Security can potentially be subject to tax regardless of your age. While you may have heard at some point that Social Security is no longer taxable after 70 or some other age, this isn't the case. In reality, Social Security is taxed at any age if your income exceeds a certain level.
At what age is Social Security no longer taxable? ›
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
Will Social Security be taxed in 2024 for seniors? ›
Starting in 2024, tax Social Security benefits in a manner similar to private pension income.
How much can a 70 year old earn without paying taxes? ›
For retirees 65 and older, here's when you can stop filing taxes: Single retirees who earn less than $14,250. Married retirees filing jointly, who earn less than $26,450 if one spouse is 65 or older or who earn less than $27,800 if both spouses are age 65 or older. Married retirees filing separately who earn less than ...
How much of my Social Security income is taxable? ›
Single filers with a combined income of $25,000 to $34,000 must pay income taxes on up to 50% of their Social Security benefits. If your combined income is more than $34,000, you will pay taxes on up to 85% of your Social Security benefits. Do you need help figuring out your required minimum distributions?
Do I have to file a tax return if I only receive Social Security? ›
Generally, if Social Security benefits were your only income, your benefits are not taxable and you probably do not need to file a federal income tax return.
How do you get the $16728 Social Security bonus? ›
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
How much of Social Security is taxable for seniors? ›
Depending on your income, up to 85% of your Social Security benefits can be subject to tax. That includes retirement and benefits from Social Security trust funds, like survivor and disability benefits, but not Supplemental Security Income (SSI).
How much of my Social Security income is taxable in 2024? ›
Up to 50% of your Social Security benefits are taxable if: You file a federal tax return as an "individual" and your combined income is between $25,000 and $34,000. You file a joint return, and you and your spouse have a combined income between $32,000 and $44,000.
Why is Social Security taxed twice? ›
The Introduction of Taxes on Benefits
The rationalization for taxing Social Security benefits was based on how the program was funded. Employees paid in half of the payroll tax from after-tax dollars and employers paid in the other half (but could deduct that as a business expense).
later, then your full retirement age for retirement insurance benefits is 67. If you work, and are at full retirement age or older, you may keep all of your benefits, no matter how much you earn.
Does Social Security count as income? ›
You report the taxable portion of your social security benefits on line 6b of Form 1040 or Form 1040-SR. Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.
Does IRS tax Social Security? ›
Social security benefits that may be taxable to you include monthly retirement, survivor and disability benefits. They don't include supplemental security income (SSI) payments or benefits you received on behalf of a dependent.
How is Social Security taxed if still working? ›
Regardless of your income level, no more than 85% of your Social Security benefits will ever be subject to federal taxation. Note that California does not currently tax Social Security benefits, although 13 other states do. For more information, see Income Taxes and Your Social Security Benefits.
At what age can I earn unlimited income while on Social Security? ›
How much can you earn and still get benefits? later, then your full retirement age for retirement insurance benefits is 67. If you work, and are at full retirement age or older, you may keep all of your benefits, no matter how much you earn.
What is the maximum Social Security benefit at age 70? ›
The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2024, your maximum benefit would be $3,822. However, if you retire at age 62 in 2024, your maximum benefit would be $2,710. If you retire at age 70 in 2024, your maximum benefit would be $4,873.
How does working after 70 affect Social Security benefits? ›
There is no incentive to delay filing for your benefits after age 70. Continuing to work may also increase your benefits, because your current earnings could replace an earlier year of lower or no earnings, which can result in a higher benefit amount.
