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.
Will Social Security be taxed in 2024 for seniors? ›
The limit for 2023 and 2024 is $25,000 if you are a single filer, head of household or qualifying widow or widower with a dependent child. The 2023 and 2024 limit for joint filers is $32,000. However, if you're married and file separately, you'll likely have to pay taxes on your Social Security income.
Do I have to pay taxes on Social Security after full retirement age? ›
Your benefits may be taxable
About 40% of people who get Social Security have to pay income taxes on their benefits. For example: If you file a federal tax return as an “individual,” and your combined income is between $25,000 and $34,000, you may have to pay taxes on up to 50% of your Social Security benefits.
How do I figure how much of my Social Security is taxable? ›
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.
Do I have to pay taxes after 70 years old? ›
Taxes aren't determined by age, so you will never age out of paying taxes. Basically, if you're 65 or older, you have to file a tax return in 2022 if your gross income is $14,700 or higher.
At what age can you earn unlimited income without affecting Social Security? ›
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.
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.
Is there a bill in Congress to eliminate taxes on Social Security? ›
Craig's You Earned It, You Keep It Act would eliminate all federal taxes on Social Security benefits beginning in 2025 – putting money back into the pockets of retirees. The bill would be paid for by raising the cap on the Social Security payroll tax, so higher-earning Americans continue paying into Social Security.
Do I have to file a tax return if my only income is 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.
You must pay taxes on up to 85% of your Social Security benefits if you file a: Federal tax return as an “individual” and your “combined income” exceeds $25,000. Joint return, and you and your spouse have “combined income” of more than $32,000.
How much can a retired person make without paying taxes? ›
Generally, your Social Security benefits are taxed when your income is more than $25,000 per year, including income from investments held in retirement accounts like traditional 401(k)s and IRAs.
Do I have to pay taxes if my only income is 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.
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.
What is the 70 rule for retirement? ›
The 70% rule for retirement savings suggests that your estimated retirement spending should be about 70% of your pre-retirement, after-tax income. For example, if you take home $100,000 a year, your annual spending in retirement would be about $70,000, or just over $5,800 a month.
