The household
A single retiree receives $20,000 of Social Security benefits in the year and has $30,000 of other income: IRA withdrawals, a pension and interest, all of it in AGI. How much of the benefit goes on the return as taxable income? The worksheet is then repeated with $18,000 of other income, and for a married person filing separately who lived with their spouse during the year.
These inputs are one of the hand-computed cases in the simulator’s test suite. The page runs them through the same tax function the simulator uses each time it is built, and the test suite checks the results against the hand calculation, so the figures here and the simulator’s cannot drift apart.
The worksheet, line by line
Social Security is taxed through “provisional income”: other income plus half the benefits. Above a base amount ($25,000 for a single filer) up to 50% of the excess becomes taxable; above a second amount ($34,000) up to 85%, never more than 85% of the benefits[1]. The amounts are set in the statute and are not adjusted for inflation.
| Social Security benefits for the year | $20,000 |
|---|---|
| One half of the benefits | $10,000 |
| Other income in AGI (pension, IRA withdrawals, interest, gains) | $30,000 |
| Provisional income (other income plus half the benefits) | $40,000 |
| Less the base amount for single | −$25,000 |
| Provisional income over the base amount | $15,000 |
| Provisional income over the adjusted base amount ($34,000) | $6,000 |
| 85% of that excess | $5,100 |
| Plus the smaller of 50% of the gap between the two base amounts and 50% of benefits | $4,500 |
| Sum | $9,600 |
| Cap: 85% of benefits | $17,000 |
| Taxable benefits (the smaller of the sum and the cap) | $9,600 |
The result, $9,600, is added to ordinary income and taxed through the brackets like any other income. The remaining $10,400 is never taxed.
The same retiree in the 50% band
| Social Security benefits for the year | $20,000 |
|---|---|
| One half of the benefits | $10,000 |
| Other income in AGI (pension, IRA withdrawals, interest, gains) | $18,000 |
| Provisional income (other income plus half the benefits) | $28,000 |
| Less the base amount for single | −$25,000 |
| Provisional income over the base amount | $3,000 |
| 50% of the excess over the base amount | $1,500 |
| Cap: 50% of benefits | $10,000 |
| Taxable benefits (the smaller of the two) | $1,500 |
With $12,000 less other income, provisional income of $28,000 is over the first base amount but not the second, so only $1,500 of the benefits is taxable.
Married filing separately
| Social Security benefits for the year | $20,000 |
|---|---|
| One half of the benefits | $10,000 |
| Other income in AGI (pension, IRA withdrawals, interest, gains) | $30,000 |
| Provisional income (other income plus half the benefits) | $40,000 |
| Less the base amount for married filing separately | $0 |
| Provisional income over the base amount | $40,000 |
| Provisional income over the adjusted base amount ($0) | $40,000 |
| 85% of that excess | $34,000 |
| Plus the smaller of 50% of the gap between the two base amounts and 50% of benefits | $0 |
| Sum | $34,000 |
| Cap: 85% of benefits | $17,000 |
| Taxable benefits (the smaller of the sum and the cap) | $17,000 |
A married person who files a separate return and lived with their spouse at any time in the year has a base amount of $0[1], so 85% of the benefits is taxable on the same income that left the single filer with $9,600: $17,000. (Spouses who lived apart all year use the single amounts; the simulator does not model that case.)
What would change this
- In the 85% band, $1,000 more of other income makes $850 more of the benefits taxable, so each extra dollar puts $1.85 of income on the return. This is the “tax torpedo”.
- In the 50% band the same $1,000 makes $500 more taxable.
- Qualified dividends, capital gains and tax-exempt interest all count in provisional income, so selling shares can make benefits taxable even when the gain itself is taxed at 0%[1].
- Roth IRA withdrawals do not count, which is why they leave this worksheet untouched.
Related
These examples show how the rules work. They are not financial, tax or investment advice. Real returns have details these examples leave out, so check the IRS instructions or ask a tax professional before you act. See the disclaimer.
Sources
- IRS Publication 915: Social Security and equivalent railroad retirement benefits ↩
- IRS Revenue Procedure 2025-32: 2026 brackets, standard deductions and capital-gains bands
Every threshold, rate and amount above is a figure the simulator uses. The sources page lists each one with its official source and the date we checked it, and the rule links in the tables go to the matching entry there.