Here's the thing almost nobody tells you before you retire: your Social Security check can be taxed. You paid in your whole working life, so it feels like it should come back clean. Sometimes it does. But depending on your income, the IRS can tax up to 85% of your benefit — and the rule that decides it is quieter than it should be. The good news: it's not complicated once you know the one number behind it.
The number that decides everything
It's called your combined income (the IRS also calls it provisional income). The formula is simpler than it sounds:
- Your adjusted gross income (think pension, IRA withdrawals, wages, investment income)
- Plus any tax-free interest you earned
- Plus half of your annual Social Security benefit
Add those three together and you have the number Social Security uses to decide how much of your check is taxable. Not your benefit alone — your whole financial picture.
The 2026 thresholds
Once you have your combined income, here's roughly where the lines fall if you're single:
- Under $25,000 — none of your benefit is taxed.
- $25,000 to $34,000 — up to 50% of your benefit can be taxed.
- Over $34,000 — up to 85% can be taxed.
If you're married filing jointly, the lines are $32,000 and $44,000. One thing worth saying clearly: "85% taxable" does not mean you lose 85% of your check. It means up to 85% of the benefit gets added to your taxable income and taxed at your normal rate. Big difference.
And here's the quiet part — those thresholds have never been adjusted for inflation. So every year, as benefits and incomes drift up, a few more retirees get pulled over the line without anything actually changing in their lives.
The break that's on the table right now
For tax years 2025 through 2028, there's a temporary extra deduction of $6,000 per person for filers 65 and older — $12,000 for a couple where both spouses qualify. It lowers the income that feeds into that combined-income formula, which means for a lot of middle-income retirees, it shrinks or completely erases the tax on their benefits. Estimates suggest the vast majority of beneficiaries end up owing nothing.
Two catches: it phases out at higher incomes, so it doesn't help wealthier retirees, and it's set to expire after 2028 unless it gets extended. So it's a real break — just not a permanent one you can plan a decade around.
What to actually do with this
You have more control here than it feels like, because combined income depends on when and how you pull money from your accounts.
- Estimate your combined income for the year before you take a big withdrawal — a single large IRA distribution can push you past a threshold.
- Look at whether spreading withdrawals across years, or leaning on Roth accounts (which don't count the same way), keeps you under a line.
- Check your state too — most states don't tax Social Security, but a handful still do.
- Run the numbers with a CPA or financial advisor before you decide when to claim or how much to withdraw. This is exactly the kind of timing question they're built for.
Deciding when to claim and how to sequence your withdrawals is a lot easier when the numbers live in one place. The Social Security Delay Strategy Worksheet helps you compare claiming ages side by side, and the Retirement Budget Worksheet lets you map your income sources for the year before tax season sneaks up. Both are in the Retirement bundle at lumeway.co.
Social Security isn't always tax-free — but a little planning is the difference between a surprise in April and a number you saw coming.
This post is for general informational purposes only and is not legal, financial, or tax advice. Income thresholds, deductions, and how benefits are taxed change over time and depend on your specific situation, and some figures noted here are temporary. Confirm current rules with the IRS or Social Security Administration and consider speaking with a licensed tax professional or financial advisor before making decisions about claiming or withdrawals.