How to Cut Your Social Security Taxes

Many retirees are dismayed to learn that they owe taxes on a portion of their benefits. But you can take steps to minimize the pain.

Cutting off the word tax with scissors
(Image credit: Getty)

After decades of having Social Security taxes withheld from your paycheck, you may not expect to pay taxes on the benefits you’ve earned. But if you have other sources of income, such as a job, a pension or withdrawals from tax-deferred retirement savings plans, there’s a good chance you’ll pay taxes on up to 85% of your benefits. Depending on where you live, your state may tax your benefits, too. 

The government started taxing a portion of Social Security benefits 40 years ago as part of an overhaul designed to shore up the program’s finances. Legislation signed by President Ronald Reagan in 1983 imposed taxes on up to 50% of benefits if a retiree’s income exceeded specific limits. Ten years later, President Bill Clinton signed legislation that made up to 85% of benefits taxable for retirees whose earnings exceeded a second income threshold.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up
Swipe to scroll horizontally
How taxes are calculated
Single filers$25,000–$34,000up to 50%
Row 2 - Cell 0 Above $34,000up to 85%
Married couples filing jointly$32,000–$44,000up to 50%
Row 4 - Cell 0 Above $44,000up to 85%

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Sandra Block
Senior Editor, Kiplinger's Personal Finance

Block joined Kiplinger in June 2012 from USA Today, where she was a reporter and personal finance columnist for more than 15 years. Prior to that, she worked for the Akron Beacon-Journal and Dow Jones Newswires. In 1993, she was a Knight-Bagehot fellow in economics and business journalism at the Columbia University Graduate School of Journalism. She has a BA in communications from Bethany College in Bethany, W.Va.