SOCIAL SECURITY

At what age is Social Security no longer taxed in the US?

Social Security provides financial support to over 63 million beneficiaries every year, but the taxation situation can vary based on a number of factors.

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At what age is Social Security no longer taxed in the US?

The vast majority of Americans will be required to pay tax on at least part of their Social Security payments, sometimes as much as 85% of the benefits if their total income exceeds certain thresholds.

Since 1983, Social Security has been subject to taxation but in the intervening four decades no inflation adjustments have been made, so almost all recipients will be required to pay tax on their payments.

However once you are at full retirement age (between 65 and 67 years old, depending on your year of birth) you will no longer be taxed on Social Security payments. The size of your annual Social Security entitlement continues to grow up to the age of 70, so you may want to consider delaying your claim for a few years if you intend to continue working past the normal retirement age.

How are Social Security payments taxed?

The tax rate for Social Security benefits varies based on a number of factors aside from just age; and the household income of recipients is the main deciding factor in taxation. Those thresholds are also dependent on the filing status of Social Security recipients.

Individuals with a total gross income, including Social Security, of more than $25,000 will be taxed on up to 50% of their Social Security income. Couples who file jointly will begin being taxed when their total income exceeds $32,000.

Individuals earning more than $34,000, or couples with a combined gross income of at least $44,000, will be taxed on up to 85% of their Social Security benefits.

Typically it is only retirees, who have very little household income aside from their Social Security entitlement, who could be exempt from taxation on the payments.

How is the Social Security tax rate calculated?

The rate of taxation levied on Social Security payments is similar to that of other forms of income. Filers must submit their adjusted gross income, which combines their salary, Social Security benefits and all other sources of taxable income.

If that total exceed the minimum threshold then at least 50% of your Social Security benefits will be considered taxable income and will be treated as such. The proportion of your total Social Security entitlement that is based on several factors, as mentioned above.