The taxability of Social Security in 2025 | Paul Pahoresky

Much discussion has taken place this past year regarding the taxability of Social Security.

Several tax law changes that were enacted in 2025 under the One Big Beautiful Bill impact the overall taxability of Social Security. However, one of the most common surprises I see at tax time is this: a client assumes Social Security is “tax-free,” and then their return says otherwise.

The reality is more nuanced.

In 2025, Social Security benefits may be partially taxable depending on your other income, and the trigger points are lower than most people expect.

Here’s how the rules work — and, more importantly, how to manage them before April.

The IRS starts with a simple question: is your “other income” high enough that some of your Social Security becomes taxable? This other income is comprised of one-half of your Social Security benefits, plus all other income, including tax-exempt interest (yes, municipal bond interest counts here). That total is often called combined income (or provisional income). Even if municipal bond interest is tax-free, it can still cause your Social Security to become taxable by increasing this combined-income figure.

For 2025, the IRS lists these base amounts:

• $25,000 if you are single, head of household, or a qualifying surviving spouse

• $32,000 if you are married filing jointly

• $25,000 if you are married filing separately and lived apart from your spouse for all of 2025

• $0 if you are married filing separately and lived with your spouse at any time during 2025

That last rule is the one that catches people off guard. Filing separately while living together can make Social Security taxable much more quickly.

If you cross the base amount, you don’t automatically pay tax on all of your benefits. Instead, the IRS applies tiers:

•  Generally, up to 50% of benefits may be taxable.

•  Up to 85% of benefits may be taxable if either: the total of one-half of your benefits plus all other income is more than $34,000 ($44,000 if married filing jointly), or you are married filing separately and lived with your spouse at any time during 2025.

A key point: 85% is the maximum portion that can be included in taxable income. It does not mean there’s an 85% tax rate on your benefits. It means up to 85% of the benefit amount can be treated as taxable income, and then your normal tax brackets apply.

For 2025 individual returns, IRS Publication 915 instructs taxpayers to report:

• Net benefits (generally Box 5 from Form SSA-1099, total of all forms) on Form 1040 / 1040-SR, line 6a

• The taxable portion on line 6b

If you’re married filing separately and lived apart all year, you also check the box on line 6d (per Pub. 915 instructions).

You should receive Form SSA-1099 for benefits paid in the year; Pub. 915 notes you’ll receive it if you got Social Security benefits during 2025. The SSA also allows you to download your 1099/1042S online (helpful when your mail goes missing).

In practice, Social Security taxation is often less about Social Security itself and more about what sits next to it: IRA withdrawals, pensions, part-time wages, dividends, capital gains and even municipal bond interest.

A few practical strategies I discuss with clients:

•  Manage the timing of IRA/401(k) withdrawals. A large year-end distribution can push combined income over a threshold and make more of your benefits taxable.

•  Be intentional with capital gains. A big gain can have a double effect—raising taxable income and triggering more Social Security taxability.

•  Don’t assume municipal bonds keep things “in the clear.” The interest may be tax-free, but it still counts in the combined-income calculation.

• Consider withholding to avoid underpayment. You can elect federal withholding from Social Security using Form W-4V, or increase withholding from other income / pay estimates.

Social Security taxability in 2025 is not a mystery—but it is a formula, and the thresholds are easy to stumble over. If you know your filing status, estimate your combined income, and plan your withdrawals with intention, you can reduce surprises and keep more control over your effective tax rate.

Paul Pahoresky is the managing member of PRP & Associates. He can be reached at 440-974-1040 ext214 or at paul@prpassoc.com. Consult your tax advisor for your specific situation for additional information and guidance on these topics.