Is Social Security Taxed After Age 70?

A common question among retirees is whether Social Security benefits become tax-exempt after reaching a certain age, such as 70. The answer is no; there is no specific age at which Social Security benefits are automatically excluded from federal income tax. The taxability of your benefits is determined not by your age but by your total income. If your income exceeds certain thresholds set by the Internal Revenue Service (IRS), a portion of your benefits will be subject to taxation.

Determining if Your Benefits are Taxable

To determine if your Social Security benefits are taxable, you must first calculate your “combined income,” a figure used by the IRS specifically for this purpose. The calculation involves three components: your Adjusted Gross Income (AGI), any nontaxable interest you received, and one-half of the total Social Security benefits you received for the year. Your AGI includes wages, self-employment earnings, interest, dividends, and distributions from retirement accounts.

Once you have calculated your combined income, you compare it to the federal income thresholds for your filing status. For individuals filing as single, head of household, or qualifying widow(er), if your combined income is $25,000 or less, your benefits are not taxed. For those with a combined income between $25,001 and $34,000, up to 50% of your Social Security benefits may be taxable. If your combined income exceeds $34,000, up to 85% of your benefits could be subject to tax.

The thresholds are different for those who are married and file a joint tax return. If your combined income as a couple is $32,000 or less, you will not owe federal taxes on your benefits. For joint filers with a combined income between $32,001 and $44,000, up to 50% of your benefits may be taxable. Should your combined income surpass $44,000, up to 85% of your Social Security benefits may be included in your taxable income. For married couples filing separately who lived together at any point during the year, the income threshold is $0, meaning a portion of their benefits is almost always taxable.

Calculating the Taxable Amount

If your combined income exceeds the base thresholds, the next step is to calculate the exact portion of your benefits that is taxable. For an individual with combined income between $25,001 and $34,000, you would compare 50% of your Social Security benefits to 50% of the amount of your combined income over $25,000. The smaller of these two figures is the taxable portion of your benefits.

The calculation becomes more involved if your income is above the second threshold ($34,000 for single filers or $44,000 for joint filers). In this scenario, up to 85% of your benefits could be taxed. The formula involves taking the lesser of 85% of your total Social Security benefits or the sum of two figures: 85% of your combined income over the higher threshold, plus the smaller of either $4,500 (for single filers) or 50% of your benefits. The IRS provides a detailed worksheet in Publication 915, “Social Security and Equivalent Railroad Retirement Benefits,” to guide taxpayers.

For example, consider a single filer with $30,000 in AGI, $20,000 in Social Security benefits, and no tax-exempt interest. Their combined income is $40,000 ($30,000 AGI + $10,000, which is half of their benefits). Since $40,000 is over the $34,000 threshold, they must use the more complex 85% calculation.

The Role of Other Retirement Income

The reason taxation of Social Security becomes a prominent concern after age 70 is directly linked to rules governing other retirement savings. The IRS mandates that individuals begin taking Required Minimum Distributions (RMDs) from their tax-deferred retirement accounts, such as traditional IRAs, 401(k)s, and 403(b)s. The age for beginning these distributions is currently 73 for individuals who turn 72 after December 31, 2022.

These are mandatory annual withdrawals calculated based on your account balance and life expectancy. The full amount of each RMD is treated as ordinary income and is included in your Adjusted Gross Income (AGI) for the year. It can substantially increase your AGI, which is a primary component of the combined income formula used to tax Social Security benefits.

For many retirees, their income may have been low enough in their late 60s to keep their Social Security benefits below the taxable thresholds. The start of mandatory RMDs can push their combined income over the $25,000 (single) or $32,000 (joint) base amounts for the first time. This sudden influx of taxable income from RMDs is often the direct cause for Social Security benefits becoming taxable for individuals in their 70s, creating the impression that the age itself is the trigger.

State-Level Taxation Rules

In addition to federal rules, you must also consider how your state of residence treats Social Security income. The majority of states do not impose their own income tax on Social Security benefits. This means that even if your benefits are taxed at the federal level, they may be completely exempt from state income tax.

A smaller number of states do tax Social Security benefits. The methods these states use can vary significantly. Some states might use their own income thresholds, which could be higher or lower than the federal ones. Others may offer specific deductions or exemptions based on age or total retirement income that can reduce or eliminate the state tax liability on benefits.

It is important to check the specific regulations for your state. The tax agency for your state will have the most accurate and current information on its treatment of Social Security income.