Up to 85% of your Social Security benefits can be subject to federal income tax — but with careful income planning, many retirees can reduce that percentage significantly, or even eliminate it. The key is managing your “combined income” (your adjusted gross income, plus any tax-exempt interest, plus half of your Social Security benefits) so it stays below the thresholds that trigger taxation. Done right, this kind of planning can save you thousands of dollars every year throughout retirement.

How much of Social Security is actually taxable?

The IRS uses a formula based on your combined income to decide how much of your Social Security benefit gets taxed. Here’s how the thresholds break down for 2026 for most filers:

  • Below $25,000 (single) or $32,000 (married filing jointly): No Social Security tax at all.
  • $25,000–$34,000 (single) or $32,000–$44,000 (joint): Up to 50% of your benefits may be taxable.
  • Above $34,000 (single) or $44,000 (joint): Up to 85% of your benefits may be taxable.

Notice those thresholds have not been adjusted for inflation since they were set in the 1980s and 1990s. That means more retirees are getting caught by them every year — which is exactly why proactive income planning matters so much.

What income sources push you over the threshold?

Not all income is created equal when it comes to Social Security taxation. The following sources count toward your combined income and can tip you into a higher bracket:

  • Traditional IRA and 401(k) withdrawals — every dollar you pull out counts
  • Required Minimum Distributions (RMDs) — mandatory withdrawals the IRS requires once you hit age 73
  • Pension income
  • Part-time work or self-employment earnings
  • Investment dividends and capital gains
  • Even tax-exempt municipal bond interest counts toward the formula (yes, really)

Roth IRA withdrawals, on the other hand, do not count toward combined income. That’s a critical planning tool we’ll come back to.

What are the RMD rules for 2025 and 2026, and why do they matter here?

Required Minimum Distributions — the amounts the IRS forces you to withdraw from traditional retirement accounts each year — start at age 73 under current rules (a change that took effect in 2023 under the SECURE 2.0 Act). For 2025 and 2026, those rules remain in place: if you turned 73 on or after January 1, 2023, age 73 is your starting line.

RMDs can be a significant tax problem because they arrive whether you need the money or not, potentially shoving your combined income well above the Social Security tax thresholds. A retiree who has done no planning might find that their RMDs alone push 85% of their Social Security into taxable territory.

One of the most powerful solutions is a Roth conversion strategy: in the years before your RMDs kick in, you gradually convert money from a traditional IRA to a Roth IRA. You pay the tax now — ideally in a lower-bracket year — and reduce the future account balance that will generate RMDs. Over time, smaller RMDs mean lower combined income, which means less of your Social Security gets taxed.

When should you claim Social Security to maximize your benefit?

Claiming age is deeply personal, but it intersects directly with tax planning. Here’s the general framework:

  • Claim at 62: You receive benefits immediately, but permanently reduced by up to 30%.
  • Claim at your Full Retirement Age (FRA): For most people reading this, FRA is 67. You receive 100% of your calculated benefit.
  • Delay to age 70: Your benefit grows by 8% per year beyond FRA — that’s a 24% boost over waiting until 67.

From a tax-minimization standpoint, delaying Social Security while doing Roth conversions in your early-to-mid 60s is often the sweet spot. You’re drawing from pre-tax accounts (and paying tax on them) during years when Social Security isn’t adding to your income yet. Then when you do claim — at a higher benefit amount — your traditional account balance is smaller, RMDs are more manageable, and less of your Social Security ends up taxed.

How do Social Security taxes connect to Medicare IRMAA surcharges?

This is where things get expensive fast if you’re not careful. IRMAA stands for Income-Related Monthly Adjustment Amount — it’s a surcharge the government adds to your Medicare Part B (and Part D) premiums if your income exceeds certain limits. In 2025, the standard Medicare Part B premium is $185.00 per month. But if your income from two years prior (the IRS uses a two-year look-back) exceeded $106,000 as a single filer or $212,000 as a joint filer, you’re paying more — potentially much more, with the highest bracket topping $628 per month per person.

Because IRMAA looks back two years, the income decisions you make today will determine your Medicare premiums in 2027 and 2028. Large Roth conversions, bunched capital gains, or a one-time income spike can push you into a surcharge bracket unexpectedly. Working with a fee-only financial planner or CPA to model these scenarios before year-end can protect you from a nasty surprise.

What practical steps can you take right now?

You don’t need to overhaul everything at once. Here are five concrete moves to start with:

  1. Calculate your current combined income — add your AGI, tax-exempt interest, and half your Social Security benefit. Where do you land relative to the thresholds?
  2. Model a Roth conversion — even a modest conversion in a lower-income year can reduce future RMDs meaningfully.
  3. Consider your Social Security claiming age — if you can afford to delay, the math often favors waiting, especially for the higher-earning spouse.
  4. Check your projected IRMAA status — look at your 2024 tax return to estimate your 2026 Medicare premiums.
  5. Coordinate withdrawals strategically — pull from taxable accounts, Roth accounts, and traditional accounts in an order that keeps your combined income in the most favorable bracket.

The good news: this kind of planning is entirely legal, widely used, and absolutely worth the effort. A retiree couple who manages their combined income below $44,000 pays zero federal tax on their Social Security. That could be thousands of dollars back in your pocket every year.

Frequently Asked Questions

Frequently Asked Questions

How much of my Social Security benefit is taxable?

It depends on your “combined income” — your adjusted gross income plus tax-exempt interest plus half of your Social Security. If that total exceeds $34,000 (single) or $44,000 (married filing jointly), up to 85% of your Social Security may be subject to federal income tax. Staying below these thresholds through careful income planning can reduce or eliminate the tax entirely.

When should I claim Social Security to maximize my benefit?

Waiting until age 70 gives you the largest possible monthly benefit — roughly 24% more than claiming at your Full Retirement Age of 67, and significantly more than claiming early at 62. However, the right age depends on your health, other income sources, and tax situation. Many financial planners recommend the higher-earning spouse delay to 70 while the lower-earning spouse claims earlier.

What are the RMD rules for 2025 and 2026?

Under the SECURE 2.0 Act, Required Minimum Distributions from traditional IRAs and 401(k)s begin at age 73 for anyone who turned 73 on or after January 1, 2023. The rules are the same for both 2025 and 2026. Failing to take your RMD results in a 25% penalty on the amount you should have withdrawn, so it’s important to plan these distributions carefully.

How do I avoid Medicare IRMAA surcharges?

IRMAA surcharges are triggered when your income from two years prior exceeds certain thresholds — $106,000 for single filers and $212,000 for joint filers in 2025. You can avoid or reduce them by managing large income events like Roth conversions, capital gains, and IRA withdrawals carefully. If you experience a life-changing event such as retirement or divorce that reduced your income, you can appeal your IRMAA determination using IRS Form SSA-44.

What is the Medicare Part B premium for 2025?

The standard Medicare Part B premium for 2025 is $185.00 per month. However, beneficiaries with higher incomes pay more through IRMAA surcharges, with premiums ranging up to over $628 per month at the highest income brackets. Your 2025 premium is based on your 2023 tax return income, so planning your income two years in advance is essential to controlling Medicare costs.