Many retirees encounter an unexpected challenge each year: reducing taxes on their hard-earned Social Security benefits. While these benefits provide essential income for millions of older adults, they can also lead to a surprising tax burden. That's because depending on your income, up to 85% of your Social Security benefits may be subject to federal tax.
For single filers, taxes on Social Security benefits generally begin when combined income surpasses $25,000; for married couples filing jointly, the threshold is $32,000. Current Social Security Administration projections show that about 56% of beneficiary families will owe federal income tax on their benefits through 2050.
While President Trump and some Democratic lawmakers have proposed eliminating these taxes, those proposals are uncertain and would require significant legislative action to become law. Some economists and policymakers warn that it might accelerate the depletion of the Social Security Trust Fund and cost the federal government $1.5 trillion over ten years.
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Given the uncertainty surrounding potential tax changes, retirees should continue to focus on strategies they can control to minimize taxes on their Social Security benefits. Here are seven to get you started.
Related: Check out Kiplinger's tax blog for the 2025 filing season. We're providing live updates, news, information, and commentary to help you navigate your taxes.
Ways to avoid paying taxes on Social Security benefits
Before we dive into some ways to potentially reduce your tax burden, it’s good to remember that the portion of your benefits that may be taxable varies since it depends on your income.
The IRS uses a tiered system based on “combined income.” (Combined income, or “provisional income,” is your adjusted gross income plus nontaxable interest and half of your Social Security benefits from the year.)
For more information, see How to Calculate Taxes on Social Security Benefits.
Unfortunately, there is no specific age when you stop paying taxes on Social Security benefits. When it comes to tax on your Social Security, it's not about how old you are — it's about your taxable income.
Also, keep in mind that each retiree's situation is unique, and what works for one person may not be ideal for another. Factors like overall retirement savings, other sources of income, and individual financial goals help determine the best approach for you.
1. Delay Social Security until 70?
One way to potentially reduce taxes on Social Security is to delay claiming your benefits. You can increase your monthly benefit by waiting until you reach full retirement age or even up to 70. This approach can provide a more significant income stream and give you more flexibility in managing your overall taxable income in retirement.
However, delaying benefits requires sufficient alternative income sources during the delay period for some and, of course, involves forgoing years of potential benefit payments.
2. Leverage Roth account rules
Roth IRAs and 401(k)s can be powerful tools in a tax-minimization plan. Unlike traditional retirement accounts, withdrawals from Roth accounts are tax-free in retirement. You can lower your taxable income in future years by strategically converting some of your traditional IRA or 401(k) funds to a Roth account before you start claiming Social Security.
Some drawbacks of that approach include the upfront tax burden from the conversion, which may elevate your current tax bracket, potentially affecting your eligibility for various tax benefits. Adequate cash reserves are also needed to handle resulting tax obligations.
3. Manage investments
The type of investments you hold can impact your tax situation. Some might consider shifting some of their portfolios to tax-efficient investments like municipal bonds or tax-exempt mutual funds. While these may offer lower yields, they can help keep your taxable income down, potentially reducing the amount of your Social Security benefits subject to tax.
However, lower returns from tax-efficient investments could result in slower overall portfolio growth, which might not fully offset the tax benefits for some investors.
Also, keep in mind that a portfolio heavy in dividends, interest, or capital gains distributions could push your taxable income higher, resulting in more of your Social Security income being subject to tax. (Even tax-free interest from municipal bonds counts toward your modified adjusted gross income (MAGI) calculation.)
Some experts suggest reallocating some assets if you are near the Social Security income threshold and don’t need that income for your day-to-day expenses.
4. Offset capital gains with losses
Tax-loss harvesting can help minimize taxes on Social Security benefits. By selling investments that have declined in value, you can realize capital losses that offset capital gains and reduce your taxable income. (Essentially, by lowering your adjusted gross income through tax-loss harvesting, you may keep your combined income below the thresholds potentially allowing more of your Social Security benefits to remain tax-free.)
Those losses can offset gains and up to $3,000 of ordinary income. However, it's important to remember that tax-loss harvesting only applies to taxable accounts and to be mindful of the wash-sale rule.
And while tax-loss harvesting can provide immediate tax benefits for retirees, it may lead to larger capital gains and potential tax burdens in the future.
5. Time withdrawals strategically
Thoughtful planning of your retirement account withdrawals can significantly affect your tax situation. Some experts recommend taking smaller withdrawals from your retirement accounts before you need to start required minimum distributions (RMDs). That can help distribute your tax burden over several years, potentially keeping you in a lower tax bracket and reducing your overall lifetime tax liability.
However, consider a drawback: This may deplete retirement savings earlier than necessary, potentially reducing the benefits of long-term tax-deferred growth.
6. Make a Qualified Charitable Distribution
Strategic charitable giving can serve double duty by supporting causes you care about while potentially lowering your tax burden.
If you're 70½ or older, consider making qualified charitable distributions (QCDs) directly from your IRA. These distributions satisfy your RMDs without increasing your taxable income.
A drawback of this approach is that it can reduce the overall funds available for personal use in retirement.
7. Consider a state with no income tax
Choosing a state that doesn't tax Social Security benefits could significantly reduce your overall tax burden in retirement. Nine states tax Social Security benefits in 2025: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. (West Virginia is phasing out the tax.)
However, exemptions and deductions can reduce or eliminate this tax even among these states.
If you're considering relocating in retirement for tax reasons:
- Research State Tax Policies: Some states offer generous exemptions or are phasing out taxes on Social Security.
- Overall Tax Picture: Consider property taxes and other state income taxes and fees when evaluating potential relocation options.
Will taxes on Social Security go away soon?
Discussions about tax policy, including how to handle taxes on Social Security benefits, are heating up since key provisions of the Tax Cuts and Jobs Act (TCJA, also known as the Trump tax cuts) are set to expire at the end of this year.
As Kiplinger has reported, President Trump and other lawmakers on both sides of the political aisle have proposed eliminating taxes on Social Security benefits, along with several other tax-cut proposals. However, such a significant change would require major legislative action and could affect the program’s funding and the federal budget. Compromises will have to be made that may mean taxes on Social Security remain in place.
In the meantime, retirees and those approaching retirement should focus on what they can control. By combining various strategies and staying flexible, you may be able to minimize the tax impact on your Social Security benefits and maximize your retirement income.
Of course, each person’s situation is unique. Consulting with a financial advisor or tax professional can help ensure you're making the most of your Social Security income.
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