It's becoming increasingly difficult to hide from taxes on Social Security benefits. How to prepare if you owe them in 2025.

The average Social Security benefit will reach $1,976 per month in January 2025. It could reach $2,000 per month for the first time this year. While these larger checks are welcome, they are not always enough for the retirees who depend on them.

This is partly due to inflation, which has hurt the purchasing power of Social Security. However, federal income taxes on seniors’ Social Security benefits also play a role. Below we’ll look at why and what to do if you plan to owe them in 2025.

Stressed couple looking at a document together.

Image source: Getty Images.

How do taxes on Social Security benefits work?

The federal government taxes some retirees’ Social Security benefits if their provisional income — their adjusted gross income (AGI)plus tax-free interest on municipal bonds and half of their annual Social Security benefits – exceeds certain thresholds related to their marital status, as shown in the table below:

Marital status	0% of taxable benefits if provisional income is less than:	Up to 50% of taxable benefits if provisional income is between:	Up to 85% of taxable benefits if provisional income exceeds:
Bachelor	$25,000	$25,000 and $34,000	$34,000
Married	$32,000	$32,000 and $44,000	$44,000

Source: Social Security Administration.

This doesn’t mean you could lose up to 85% of your benefits. This means you could pay ordinary income tax up to this amount. But giving up one of your benefits can be difficult, especially if you don’t have a lot of personal savings.

These taxes were once less common than they are today. Rising average benefits, combined with tax thresholds that have not changed in three decades, have forced more retirees each year to hand over part of their benefits to Uncle Sam.

Sometimes it’s possible to avoid these taxes by reducing the amount you withdraw from your retirement accounts or relying more on Roth savings. You are generally allowed to withdraw these funds tax-free, so they do not affect your AGI or provisional income. But this may not be feasible for everyone.

How to Prepare for Income Tax on Social Security Benefits

If you don’t think you can avoid Social Security income taxes on your benefits, your best bet is to prepare. It is possible to put this money aside yourself and pay any amount owed at tax time if you wish. You may want to consult a tax professional to help you estimate how much you might owe.

You can also ask the Social Security Administration to withhold a portion of your tax checks. You can do this by contacting the Social Security Administration by phone or visiting your local office. You can also download form W-4 V on the IRS website and mail it to your local Social Security office.

Don’t Forget State Income Taxes on Benefits

So far, we’ve only talked about federal taxes on Social Security benefits, but also a handful of state tax benefits. In 2025, you may have to worry about state benefit taxes if you live in one of the following places:

Colorado
Connecticut
Minnesota
Montana
New Mexico
Rhode Island
Utah
Vermont
West Virginia

However, not all retirees in these states owe taxes. Everyone has their own formula that determines who owes these taxes. Check with your state tax department or a local accountant to find out how much, if anything, you may have to pay taxes on state Social Security benefits in 2025.