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Staying within the social security income limits is very important when determining how much of your social security will be taxed.

To determine how much of your social security will be taxable you must start by calculating your provisional income. This can be calculated by taking your adjusted gross income (AGI) plus any tax-free interest from municipal bonds and 50% of your social security income.

If your provisional income is:

  • Provisional income less than $25,000 ($32,000 if married filing jointly) then your social security is not subject to tax
  • Provisional income $25,000 – $34,000 ($32,000 – $44,000 if married filing jointly) then 50% of your social security income will be taxable at your income tax rate
  • Provisional income $34,000+ ($44,000+ if married filing jointly) then 85% of your social security income will be taxable at your income tax rate

Tax Tip

At the moment Roth IRA income does not count towards provisional income and can be a great source of additional income that doesn’t cause your social security to be taxable.

Social Security Changes

There is a bill that was presented to make increase the 0% social security tax income limits but require high-income earners (over $400,000) to pay more in social security tax. We will continue to monitor this bill and other changes.

As always our tax plan for business owners or investors bundles this knowledge and MUCH more into account to create your individualized tax plan to be used for YEARS. Feel free to text, email, or call us to see how a tax plan could benefit you.

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