Will You Owe Taxes on Social Security? Here's How to Tell

Roughly one-in-five people over age 65 or older either worked or were looking for work in 2024, according to recent Bureau of Labor Statistics research. Of those, 38.3% worked part-time. The choice to continue working later in life can have a positive impact on lifestyle, longevity, and health-span.

But it also has financial ramifications to be aware of, especially when it comes to collecting Social Security and paying taxes on that income. Many older Americans choose to continue working even after they can start collecting Social Security benefits at age 62. Some do it to delay collecting benefits until Full Retirement Age, which can dramatically boost your Social Security benefits later in life.

Others do it for intangible, non-financial reasons. "

As an employment lawyer, I deal with individuals over the age of 65 who continue to work well beyond the age of retirement," said Eric Kingsley, partner at Kingsley Szamet Employment Lawyers.

“I can tell you unequivocally that the majority of these individuals are not working because they have to; they are working because they want to." Kingsley noted that most of his clients net $80,000 to $150,000 per year; lower-income Americans may need to work past their retirement age to make up for income gaps rather than working by choice. Whether you choose to work for intellectual stimulation and enjoyment or because you'd have a hard time making ends meet without income from your job, it's important to understand how taxes on Social Security benefits work.

Provisional Income: The Key to Calculating Social Security Taxes Let's assume you've reached full retirement age (67 if you were born in 1960 or later) and continue to work full time. Your benefits won't be reduced, but a portion of those benefits will be taxed at your marginal tax rate. How much of those benefits will be taxed?

It all depends on your provisional, or combined, income. To calculate provisional income: Adjusted Gross Income (AGI) + Nontaxable interest + 50% of Social Security benefits Single filers with a combined income over $25,000 but less than $34,000 will pay taxes on up to 50% of their Social Security benefits. A single filer with a combined income greater than $34,000 will pay taxes on up to 85% of their benefits.

These numbers rise to $32,000 and $44,000 for married couples filing jointly. "

This does not mean 85% of the benefits is taxed at 85%. It means up to 85% of the benefit is taxed at the ordinary income tax rate," Kingsley stressed. Unlike tax brackets, the standard deduction, and other tax thresholds to qualify for deductions or credits, the provisional income limit is not adjusted annually for inflation.

It takes an act of Congress to change the rate. While Social Security benefits continue to rise with COLA (cost-of-living-allowance) increases, provisional income limits remain the same. "

This is the reason more people are being taxed today than in the past," Kingsley pointed out. If your combined income is $25,000 or less ($32,000 as a married couple filing jointly), you won't have to pay any taxes on your Social Security benefits. Additional Taxes In addition to paying taxes on your benefits, you'll also pay into Social Security through payroll taxes as long as you're working.

These taxes equal 6.2% of your income up to the Social Security wage base. "

If an individual makes $120,000 per year, that is $7,440 per year just in Social Security taxes. If an individual makes more than that, the amount is even greater," Kingsley said. Is Delaying Social Security Benefits a Better Choice?

For some individuals who are working into their late 60s, it makes financial sense to delay taking Social Security benefits until you reach full retirement age or even longer. Delaying past FRA can boost your monthly benefits by as much as 24%, as reported here by Nifty50Plus.com. Kingsley said that many of his clients who continue to work also choose to delay filing for Social Security.

The income from their job helps make this possible. "

The longer you wait to receive Social Security benefits, the more you receive," he said. Overall, he said, it's important to view retirement not as a specific age, but a financial decision where multiple factors come into play. Related: Pet spending surges even in rough economy, new study The Arena Media Brands,

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is a registered trademark of TheStreet, Inc. This story was originally published March 24, 2026 at 8:26 AM.