For single people, your Social Security benefits aren't taxed if your base income is less than $25,000. The threshold is $32,000 if you're married and filing a joint return. If your base income is between $25,000 and $34,000 for a single filer, or from $32,000 to $44,000 for a joint filer, then up to 50% of your Social Security benefits may be taxable. If your base income is more than $34,000 on a single return, or $44,000 on a joint return, up to 85% of your benefits may be taxable.
The IRS has a handy calculator that can help you determine whether your benefits are taxable.
State Taxation of Social Security Benefits
In addition to federal taxes, there are also 13 states that tax Social Security benefits. The methods and extent to which these states tax benefits vary. For example, Utah treats Social Security benefits the same way as the federal government. On the other hand, some states tax Social Security benefits only if income exceeds a specified threshold amount. Nebraska, for instance, taxes Social Security benefits only if your income is at least $43,000, or $58,000 if you're married filing a joint return.
For information about state Social Security taxes, see 13 States That Tax Social Security Benefits. If you don't live in a state that taxes Social Security benefits, check out 38 States That Don't Tax Social Security Benefits for information on income, sales, property and estate taxes that retirees might face. Also see Kiplinger's State-by-State Guide for Taxes on Retirees for the full tax picture in each state, and our lists of the 10 most tax-friendly states for retirees and the 10 least tax-friendly states for retirees.