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Case Study 1 - Taxation of Social Security for Married Couples

$28,000 in Social Security

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The standard rule of thumb is that depending on how much "other income" you have (which for this calculation is defined as income in addition to your Social Security benefits), you will pay taxes on 50% to 85% of your Social Security benefits. It's actually not so simple. (You can find additional details in Taxes on Social Security Benefits.)

When you work your way through the formulas, you can pay tax on anywhere from 0 - 85% of your Social Security benefits. The numbers in the table below were generated by professional tax preparation software, and they show married filers how much of your Social Security benefits become taxable for every $1,000 of other income that you have. It also shows how much tax you would pay.

The case study below is for a married couple with about $28,000 a year of Social Security income. You can see that although your average tax rate may stay low, the incremental rate on the next $1,000 of income you have jumps to 27.8% when you reach $31,000 of income in addition to your Social Security income.

Compare the table below to the Social Security Taxation Case Study 2, which shows a couple with $12,000 in Social Security, or Social Security Taxation Case Study 3, which shows a couple with $40,000 in Social Security.

Or compare it to this tax torpedo table done using 2002 tax rates, when the incremental rate for someone with about the same amount of income was as high as 50%. This near 50% marginal rate still occurs at some income levels as you see in Case Study 3 at the link above.

The table below uses the following assumptions:

  • Married filer
  • $28,248 in joint Social Security benefits
  • Source of data in table: Rhonda Keene's calculations, done with Lacerte 2010

Case Study 1 - Taxation of Social Security for Married Couples

Other Income Federal Income Tax Taxable Soc. Security Tax Increase Rate on $1,000 Increase Avg. Tax Rate Gross Income
18,000 - 62 - - - 46,248
19,000 86 562 86 8.6% 0.2% 47,248
20,000 236 1,062 150 15.0% 0.5% 48,248
21,000 388 1,562 152 15.2% 0.8% 49,248
22,000 538 2,062 150 15.0% 1.1% 50,248
23,000 688 2,562 150 15.0% 1.3% 51,248
24,000 838 3,062 150 15.0% 1.6% 52,248
25,000 988 3,562 150 15.0% 1.9% 53,248
26,000 1,138 4,062 150 15.0% 2.1% 54,248
27,000 1,288 4,562 150 15.0% 2.3% 55,248
28,000 1,438 5,062 150 15.0% 2.6% 56,248
29,000 1,588 5,562 150 15.0% 2.8% 57,248
30,000 1,776 6,105 188 18.8% 3.0% 58,248
31,000 2,054 6,955 278 27.8% 3.5% 59,248
32,000 2,331 7,805 277 27.7% 3.9% 60,248
33,000 2,609 8,655 278 27.8% 4.3% 61,248
34,000 2,886 9,505 277 27.7% 4.6% 62,248
35,000 3,164 10,355 278 27.8% 5.0% 63,248
36,000 3,441 11,205 277 27.7% 5.4% 64,248
37,000 3,719 12,055 278 27.8% 5.7% 65,248
38,000 3,996 12,905 277 27.7% 6.0% 66,248
39,000 4,274 13,755 278 27.8% 6.4% 67,248
40,000 4,551 14,605 277 27.7% 6.7% 68,248
41,000 4,829 15,455 278 27.8% 7.0% 69,248
42,000 5,106 16,305 277 27.7% 7.3% 70,248
43,000 5,384 17,155 278 27.8% 7.6% 71,248
44,000 5,661 18,005 277 27.7% 7.8% 72,248
45,000 5,939 18,885 278 27.8% 8.1% 73,248
46,000 6,216 19,705 277 27.7% 8.4% 74,248
47,000 6,494 20,555 278 27.8% 8.6% 75,248
48,000 6,771 21,405 277 27.7% 8.9% 76,248
49,000 7,049 22,255 278 27.8% 9.1% 77,248
50,000 7,326 23,105 277 27.7% 9.4% 78,248
51,000 7,604 23,955 278 27.8% 9.6% 79,248
52,000 7,761 24,011 157 15.7% 9.7% 80,248
53,000 7,911 24,011 150 15% 9.7% 81,248
54,000 8,061 24,011 150 15% 9.8% 82,248
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