How Much of My Social Security Income Will Be Taxed?

Last Updated: September 27, 2022

Social security income (SSI) is a bit tricky when it comes to taxes. Though “a bit” might be an understatement for many folks.

Now you may be wondering why I’m talking about social security income on a blog about FIRE. Isn’t social security going to be gone by the time any of today’s early retirees reach their 60’s?

Well, no, it’s not going to be gone. Yes, Congress might have to act (and I’m pretty sure they will, given the rage they will face from constituents if they don’t), and we might see a bit lower benefits and a later retirement age (since the social security program was designed when lifespans were much shorter), but it won’t go away.

And as described in my previous post, your SSI can be a pretty dang important part of your income later in life, and thus it’s vital to account for it. 

Want an estimate of how much SSI you can expect to get? Create an account at the social security administration site, where it will show if you have enough credits to receive SSI, as well as how much it predicts you’ll receive at a few different standard retirement ages (which you can adjust to specify a much lower or zero income after the current year, if you’re FIREing this year).

Computing Taxable SSI

Also in my previous post I described a method for withdrawing funds after achieving FIRE that I call the Tax and Penalty Minimization (TPM) method, which involves targeting specific taxable income levels to minimize taxes and penalties. 

But, to target a specific taxable income with SSI, you’ve gotta know how much of your SSI is taxable.

And guess what? To no one’s surprise, the IRS method for computing the amount of your SSI that is taxable is not super simple.

I searched extensively online for a straightforward algorithm I could use, but all I could find was hand waving about 50% and 85% brackets, and about how the maximum amount of your SSI that is taxable is 85%. In the end I had to derive it myself from the relevant IRS worksheet

Below is my attempt to create what I could not find online – a description of the algorithm that is not in the language of IRS worksheets.

Algorithm: Computing Taxable SS Income

Turns out that taxable SSI is a function of three things: your tax filing status (single, married filing jointly, etc.), your total non-SSI (all other standard income plus all long term cap gains), and your total SSI (so combined SSI for married filing jointly).

Note: the below algorithm assumes that lines 4, 5, 7 of the IRS worksheet are zero, as they are relatively uncommon factors. But if they apply to you, make sure you account for them. 

Filing Status Values

To start, a couple of factors are specified based on your filing status. 

If you’re single, head of household, qualifying widow(er), or married filing separately, a value we’ll call “Minimum Income” (MI) is specified as $25K, and a value we’ll call “Delta” (which is the size of the 50% taxable bracket) is $9K.

If you’re married filing jointly, MI is $32K and Delta is $12K. 

Minimum Income (MI)

If your total non-SSI plus half of your SSI (Non-SSI + 0.5*SSI) does not reach this MI value, then none of your SSI is taxable and you can stop the algorithm.

Over MI, but Still Within 50% Bracket

If Non-SSI + 0.5*SSI DOES exceed the MI value, then we must determine if it stays within the 50% bracket. 

If the amount that Non-SSI + 0.5*SSI exceeds MI (Non-SSI + 0.5*SSI – MI) is less than the 50% bracket length Delta, then OverDelta is zero – easy! If not, then go to the next section.

Then we must determine how much of the income inside that 50% bracket is taxable, which we’ll call Theta. Theta is set to be the smaller of these two quantities: (Non-SSI + 0.5*SSI – MI) / 2, or 0.5*SSI. 

So if Non-SSI – MI is over 0.5*SSI, then the smaller quantity is 0.5*SSI. If not, then (Non-SSI + 0.5*SSI – MI) / 2 is the smaller quantity. So it depends on how much Non-SSI you’re bringing in and how much your SSI is. 

Over MI, and Beyond 50% Bracket

Now if Non-SSI + 0.5*SSI exceeds both the MI value AND the top of the 50% bracket (MI + Delta), ignore the previous section and do the following.

First compute the amount that we go over the 50% bracket: OverDelta = SSI*0.5 + Non-SSI – MI – Delta.

Then we must determine how much of the income inside the 50% bracket is taxable, which we’ll call Theta. Theta is set to be the smaller of these two quantities: 0.5*Delta or 0.5*SSI. 

So if your SSI is pretty small and thus half your SSI is less than half the 50% bracket window, you’ll use that. If your SSI is more sizeable and thus half the 50% bracket window is greater than half your SSI, the amount of income in that bracket you’ll pay is limited to just 50% of that bracket. 

Computing Final Taxable SSI

The final step of computing your taxable SSI consists of selecting the smaller of two values:

  • 0.85*SSI (85% of your SSI)
  • Theta + 0.85*OverDelta (the taxable amount in 50% bracket plus 85% of the amount over the 50% tax bracket)

Thus the maximum percentage of your SSI that is taxable is 85%. 


After deriving/consolidating the above algorithm, I created a Python tool that allows you to compute how much of your SSI is taxable

To verify the above algorithm always produces the same answer that the IRS worksheet produces, I created two different functions: one that sticks as closely to the IRS worksheet as possible, and another that uses the above consolidated logic.

I ran each function with an array of SSI values ($1K increments from $0 to $50K), and for each SSI value I ran with an array of non-SSI values ($100 increments from $0 to $100K). 

Every single one of those 50*1000 = 50K values were identical for both methods. Thus I feel confident in the above consolidated logic for computing the final taxable SSI, but if you can find a scenario where the above algorithm doesn’t match the IRS worksheet, please let me know.


When I first reviewed and consolidated the algorithm for computing the taxable SSI, I still couldn’t wrap my head around it very well. So to build up some intuition, I decided to plot the taxable SSI over a range of both non-SSI and SSI values.


Before plotting though, I thought I’d check quickly to see if there is any kind of maximum amount of SSI you can receive – so my plots have reasonable bounds. And it turns out, YES, there is! Which in hindsight doesn’t surprise me, because there’s also a maximum amount of income you can be taxed on for social security. 

Turns out the maximum monthly SSI anyone can receive in 2022 is $4,194 – which would involve earning at or over that maximum taxable amount for social security ($147,000 in 2022) for all 35 of your top earning years (adjusted for inflation) – not an easy feat, but it can be done by a select few. It also involves waiting until age 70 to collect benefits – again, unlikely (and perhaps not the smartest move in terms of market returns), but it can be done.

So a maximum monthly SSI of $4,194, that’s a yearly SSI of $50,328. And if you’re married and you both somehow pulled off getting the max, then double that to $100,656. 

Thus the “Married” filing status plots below use a maximum of $100K SSI, and all other status plots use a maximum of $50K SSI. 

Filing Status: Married Filing Jointly

First up, let’s look at plots for the Married Filing Jointly status.

If we compute the taxable SSI for non-SSI values in $100 increments ranging from $0 to $100K, and we do that for five different SSI values ($20K, $40K, $60K, $80K, and $100K), we can see five plotted lines corresponding to those five different SSI values:

The first thing that jumps out to me, besides the cool stair-step look of this figure, is how each line hits a “plateau” that corresponds to 85% of the SSI value. So the SSI $20K plot levels off at $17K, the SSI $40K plot levels off at $34K, etc.

You can also see that for higher SSI values, it takes more non-SSI to hit that max 85% taxable SSI. E.g. if you have $20K in SSI, you’ll hit the max around $47K non-SSI; but if you have $60K in SSI, you won’t hit the max until non-SSI reaches about $65K.

Thus looking at this plot, you can get a sense of how much non-SSI results in the 85% max rate for a particular SSI. So if your SSI is about $30K, you’d need to have non-SSI in the ballpark of $50K to pay taxes on 85% of your SSI. And if you have non-SSI in the ballpark of $20K or less, then most or all of your SSI will not be taxable.

Across all SSI values, the more non-SSI you have, the more likely some of your SSI will be taxable, and the more likely you are to have the full 85% of your SSI taxable. This fact implies that if you have the ability to reduce your income somehow (e.g. via retirement account contributions or keeping more money in your business vs paid out as salary), you might be able to also reduce the amount of SSI that is taxable (and thus your total tax bill).

Finally, if you look closely you can see three distinct bends in the plots:

  • the point where there is enough non-SSI to have some taxable SSI
  • the point where the taxable SSI transitions from exclusively inside the 50% bracket to also include the 85% bracket
  • the point where you max out at 85% of SSI

The transition bend point from the 50% bracket to the 85% bracket happens at a different non-SSI for each SSI plot considered, but the taxable SSI (vertical axis value) for each bend point is the same, due to the constants used for all scenarios (see section “Filing Status Values” above). E.g. the Married Filing Jointly 50% bracket width is $12K, so the bend point for all plots is 0.5*$12K = $6K.

Now let’s look at a plot that’s roughly the inverse of the above plot: compute the taxable SSI for SSI values (instead of non-SSI values) in $100 increments ranging from $0 to $100K, for five different non-SSI values ($20K, $40K, $60K, $80K, and $100K):

The first thing you might notice is that there is no “leveling off” in this figure, unlike the previous figure. Why?

Well even if you’re at the maximum 85% of SSI for taxable SSI, a growing SSI will mean a growing taxable SSI. So we should never expect a flat line in this kind of plot.

In fact, the magenta line for non-SSI of $100K is ALWAYS at the maximum 85% of SSI, all the way up to $100K SSI. 

The green and blue lines for non-SSI of $80K and $60K are also at that max 85% line until they break away with sufficiently high SSI – because 85% of the SSI value is no longer the smaller value when running the Taxable SSI algorithm (see section “Computing Final Taxable SSI” above). 

The red line for non-SSI of $40K starts in the 50% bracket, then it first enters the 85% bracket just prior to $10K SSI but SSI is still small enough that the taxable SSI in the 50% bracket is less than half the bracket length (see last paragraph of section “Over MI, but Still Within 50% Bracket” above). With just a bit more SSI though, the taxable SSI in the 50% bracket is just equal to half the bracket length, and it stays that way for the rest of the SSI values. These two transitions explain the two bend points around $10K SSI. 

The black line for non-SSI of $20K is ZERO until $24K, at which point it first enters the 50% bracket. It then later enters the 85% bracket, and finishes around $45K at SSI = $100K. Thus it never comes close to reaching the 85% max of SSI.

Filing Status: Single, Head of Household, Qualifying Widow(er), or Married Filing Separately

Now let’s look at the same plots, but for all the other filing statuses (crazy word), which have the same constants as given in section “Filing Status Values” above. I’ve also reduced the maximum SSI considered to $50K, given the discussion in the “Max SSI” section above.

Computing the taxable SSI for non-SSI values in $100 increments ranging from $0 to $100K, for five different SSI values ($10K, $20K, $30K, $40K, and $50K):

This figure is very similar to the Married Filing Jointly equivalent plot above, with the nice stair-step look and the two bends for each line. Be careful when comparing though: these lines have smaller SSI than the Married Filing Jointly lines, and the vertical scale is smaller as well. 

The same conclusions hold though: the more non-SSI you have, the more likely some of your SSI will be taxable, and the more likely you are to have the full 85% of your SSI taxable. And thus if you can reduce your non-SSI income somehow, you might also reduce the amount of your SSI that is taxable (but only if you can reduce it enough to get off that 85% plateau). 

Now computing the taxable SSI for SSI values (instead of non-SSI values) in $100 increments ranging from $0 to $50K, for five different non-SSI values ($20K, $40K, $60K, $80K, and $100K):

Again we see that the non-SSI lines of $100K, $80K, and $60K stay at the maximum 85% taxable SSI line, and only the $40K and $20K lines have small enough non-SSI to drop away from that line. 

Example Scenarios

OK, that’s a lot of words about algorithms and plots (which of course are very fun, as I’m sure 100% of people will agree), but how about some actual example scenarios? Especially ones where we can take maximum advantage of all this analysis we’ve done?

Roy and Rose: Living the Single Life

Let’s start with two different single people, Roy and Rose. Both Roy and Rose earn $20K in social security income, and both earn $40K a year working part time jobs in the industries they retired from. 

Roy thinks to himself, “well I’m retired, so no need to worry about retirement account contributions anymore”. So he logs into his company’s portal and turns that off. 

Rose lives frugally and has a nice nest egg of post-tax assets she can use for expenses, so she decides to not only keep contributing to her 401K, but actually take advantage of the fact that she’s over 50 to push up her contribution to $27K a year (the limit for those under 50).

As a result, Roy will owe taxes on 85% of his social security income, equal to $17K. In contrast, Rose will owe taxes on NONE of her social security income!

The final tax bill Roy will have: $5308. 

The final tax bill Rose will have: $5!

See the diagram at the top of the post for a graphical version of this example.

Claire and Cliff: Living the Married Life

Next let’s look at some married folks. Claire and Cliff are both married (to other people, not to each other), and jointly file their taxes each year with their spouses.

Claire and her partner earn a total of $40K in social security income, and bring home $60K a year from the part time jobs they enjoy in retirement. Cliff and his partner also have $40K in social security income and also a $60K yearly income from part time jobs.

Just like Roy above, Claire and her partner don’t worry about retirement contributions anymore. 

Just like Rose above, Cliff and his partner live frugally and understand the tax benefits of retirement accounts even when retired, so they each contribute $24K to their 401Ks, for a total of $48K.

As a result, Claire will owe taxes on 85% of her joint social security income, equal to $34K. In contrast, Cliff will owe taxes on NONE of his joint social security income!

The final tax bill Claire will have: $7761.

The final tax bill Cliff will have: $0!

Here’s a pretty graphical representation of this example:


If you’d like to plug in your expected or actual social security income and “other income”, as well as filing status, to see how the above plots change (and perhaps do some tax planning to reduce taxable social security income), or if you just want to dig into the code I used to generate the plots and values above, you can download the code or see the embedded Python interpreter below.

Modify the user inputs section at the top as desired, then hit the Run/Play (sideways triangle) button to generate the plots. To go back to the script to make any changes, hit the Pencil icon. If you want the text larger, hit the hamburger menu button, then scroll to the bottom to see larger font options. In that same menu you can also Full Screen the window, and other actions.

Note that you can use the inputs labeled as “Married scenario” and “Other status scenario” to obtain the same plots as above. Use the pound sign “#” to comment out a line so that it’s not used.


I am both surprised and not surprised at how complicated it is to compute how much of your social security income is taxable. 

I was surprised because I initially expected it to be more like traditional federal income tax brackets – simply hitting higher rate brackets as the income number goes higher. And I was also surprised I couldn’t find an article anywhere that really cleanly and fully outlined the algorithm – though given the surprising complexity, I guess I shouldn’t be surprised I couldn’t find such an article. Though if you are aware of one, please let me know in the comments!

In the end I was NOT surprised though, given the political and bureaucratic forces that likely shaped these rules. BUT, if you can go through the math yourself, there’s gold in them thar hills! E.g. reducing your standard income somehow could mean quite a bit less of your SSI is taxable. 

And as I’ll show in the next article, understanding exactly how your taxable SSI is computed allows you to target a precise standard income such as the standard deduction, which is vitally important in the Tax and Penalty Minimization FIRE withdrawal method.

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