Social Security benefits, including retirement, survivor, and Social Security Disability Insurance (SSDI) benefits, may be partially taxable depending on your filing status and combined income. Supplemental Security Income (SSI) is different. SSI is a needs-based benefit, is never taxable, and is not reported as income on a federal tax return.
Understanding the difference between Social Security benefits and SSI is important because they are treated very differently for tax purposes.
Social Security vs. Supplemental Security Income (SSI)
Social Security benefits are based on your work and earnings history. These benefits are funded through payroll taxes and may include:
- Retirement benefits
- Survivor benefits
- Social Security Disability Insurance (SSDI)
Depending on your income, a portion of your Social Security benefits may be taxable. Recipients generally receive Form SSA-1099 each year showing the benefits paid during the year.
Supplemental Security Income (SSI) is a needs-based program for qualifying aged, blind, or disabled individuals. Unlike Social Security benefits, SSI:
- Is not based on work history
- Is funded through general government revenues
- Is never taxable
- Is not entered on a federal income tax return
- Does not generate Form SSA-1099
If a taxpayer receives SSI only, there is typically no taxable Social Security income to report.
How Taxable Social Security Is Calculated
The IRS determines whether Social Security benefits are taxable using a formula based on combined income, sometimes called provisional income.
Combined income is calculated as:
Adjusted Gross Income (AGI) + Nontaxable Interest + One-Half of Social Security Benefits
The higher your combined income, the larger the taxable portion of your Social Security benefits may be.
Combined Income Thresholds
For taxpayers filing as Single, Head of Household, or Qualifying Surviving Spouse:
| Combined Income | Taxable Portion |
|---|---|
| Less than $25,000 | Generally 0% |
| $25,000 to $34,000 | Up to 50% |
| More than $34,000 | Up to 85% |
For Married Filing Jointly taxpayers:
| Combined Income | Taxable Portion |
|---|---|
| Less than $32,000 | Generally 0% |
| $32,000 to $44,000 | Up to 50% |
| More than $44,000 | Up to 85% |
For Married Filing Separately taxpayers:
| Combined Income | Taxable Portion |
|---|---|
| Any amount | Generally up to 85% |
The actual taxable amount is calculated using IRS worksheets and may be less than the maximum percentage shown.
How Much of Social Security Can Be Taxed?
No more than 85% of Social Security benefits can ever be included in taxable income.
This does not mean benefits are taxed at an 85% tax rate. Rather, it means that up to 85% of the benefits received may be included in taxable income and taxed at the taxpayer's normal income tax rate.
The IRS provides detailed worksheets in Publication 915 to calculate the exact taxable amount.
Reporting Social Security Benefits
Taxpayers who receive taxable Social Security benefits generally receive Form SSA-1099 each January.
The SSA-1099 reports:
- Total Social Security benefits received
- Any Medicare premiums withheld
- Federal income tax withheld, if applicable
Tax software uses the information reported on Form SSA-1099 to determine whether any portion of the benefits is taxable and to calculate the correct amount automatically.
Senior Deduction for Tax Years 2025 Through 2028
Recent tax law changes created an additional deduction for many taxpayers age 65 and older.
Eligible taxpayers may qualify for:
- $6,000 additional deduction for Single filers
- $12,000 additional deduction for Married Filing Jointly filers
The deduction begins to phase out when modified adjusted gross income (MAGI) exceeds:
- $75,000 for Single filers
- $150,000 for Married Filing Jointly filers
Unless extended by Congress, this additional deduction is scheduled to expire after 2028.
It's important to note that Social Security benefits remain taxable under existing rules. The income thresholds used to determine whether benefits are taxable have not changed. However, the additional senior deduction may reduce overall taxable income, which can help lower a taxpayer's federal tax liability.
Special Considerations for Disability Benefits
Social Security Disability Insurance (SSDI) benefits are treated the same as Social Security retirement benefits for federal tax purposes. Depending on combined income, a portion of SSDI benefits may be taxable.
Supplemental Security Income (SSI), however, remains fully non-taxable regardless of income level and should not be reported on a federal tax return.
When Social Security Benefits Are Most Likely to Be Taxable
Social Security benefits are more likely to become taxable when taxpayers also have other sources of income, such as:
- Wages
- Self-employment income
- Pension income
- IRA distributions
- Investment income
- Interest and dividends
As these additional income sources increase, the taxable portion of Social Security benefits may also increase.