Federal Taxes: The “Combined Income” Formula

Even if you live in a tax-free state like Florida or Texas, Uncle Sam might still want a cut. It is crucial to remember that federal taxation of Social Security affects retirees nationwide.

The IRS uses a metric called “Combined Income” to decide if your benefits are taxable.

“Combined Income = Adjusted Gross Income (AGI) + Nontaxable Interest + 1/2 of your Social Security Benefits”

Federal Thresholds (2025):

• Individual:
  • $25,000 – $34,000: Up to 50% of benefits may be taxable.
  • Over $34,000: Up to 85% of benefits may be taxable.
• Married Filing Jointly:
  • $32,000 – $44,000: Up to 50% of benefits may be taxable.
  • Over $44,000: Up to 85% of benefits may be taxable.

Note: “Taxable” doesn’t mean the IRS takes 85% of your check. It means 85% of the benefit amount is added to your income and taxed at your regular rate.