Social Security Taxation Calculator: the facts

1. Whether a Social Security benefit is taxed depends on provisional income: adjusted gross income without the benefit, plus tax-exempt interest, plus half the benefit.
2. Nothing is taxable below a base amount of $25,000 on a single return and $32,000 on a joint return. Up to half is taxable between the base and an adjusted base of $34,000 single and $44,000 joint. Up to 85 percent is taxable above that.
3. The thresholds were fixed in 1983 (the base) and 1993 (the adjusted base) and are not indexed to inflation, so each year more retirees cross them without any change in real income.
4. A married couple with $36,000 of benefits and $40,000 of other income has provisional income of $58,000; $17,900, 49.7% of the benefit, is taxable.
5. Eighty-five percent is the ceiling. No level of income makes more than 85 percent of a benefit taxable.
6. Inside the two zones, each extra dollar of other income drags 50 cents, then 85 cents, of benefit into taxable income, so the marginal tax rate on that dollar can be 1.5 or 1.85 times the bracket rate.

Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms.