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Benefits Are Up: Taxation of Social Security Benefits

Per, the Social Security and Supplemental Security Income (SSI) benefits for more than 71 million Americans will increase 3.2 percent in 2024. Other notable facts include:

  1. The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $168,600.

  2. The earnings limit for workers who are younger than "full" retirement age (see Full Retirement Age Chart) will increase to $22,320. (We deduct $1 from benefits for each $2 earned over $22,320.)

  3. The earnings limit for people reaching their “full” retirement age in 2024 will increase to $59,520. (We deduct $1 from benefits for each $3 earned over $59,520 until the month the worker turns “full” retirement age.)

  4. There is no limit on earnings for workers who are "full" retirement age or older for the entire year.

Social Security, a critical component of retirement income for many Americans, is often viewed as a source of financial security during the golden years. However, what some retirees may not realize is that their Social Security benefits can be subject to taxation. In this article, we will explore the taxation of Social Security benefits and how careful planning can help you optimize your retirement income.

Understanding the Basics: How Social Security Benefits Are Taxed

To comprehend the taxation of Social Security benefits, it's essential to understand two critical thresholds: the Provisional Income and the IRS taxation guidelines.

  1. Provisional Income: This is a key factor in determining whether your Social Security benefits will be taxed. It includes your adjusted gross income (AGI), any tax-exempt interest, and half of your Social Security benefits. If you're filing jointly, you'll need to consider both partners' incomes.

  2. IRS Taxation Guidelines: Based on your provisional income, the IRS has set specific rules for the taxation of Social Security benefits. Here are the key points:

    • If your provisional income falls below a certain threshold, your benefits are not subject to federal income tax.

    • If your provisional income is between the defined thresholds, up to 50% of your Social Security benefits can be taxed.

    • If your provisional income exceeds the upper threshold, up to 85% of your benefits may be subject to taxation.

Strategies to Minimize Taxation

Some strategies to help minimize the taxation of Social Security benefits:

  1. Optimize Retirement Account Withdrawals: Carefully plan withdrawals from retirement accounts to manage your provisional income. By controlling your AGI, you can potentially reduce the amount of Social Security benefits subject to taxation.

  2. Leverage Tax-Efficient Investments: Consider investing in tax-efficient vehicles such as municipal bonds or tax-efficient mutual funds to help lower their tax liability.

  3. Roth Conversions: Consider Roth IRA conversions, which can help reduce taxable income in retirement, potentially keeping Social Security benefits from being taxed.

  4. Spousal Income Splitting: If you're married, explore strategies to balance income between spouses. This can help keep both partners in a lower taxation bracket.

  5. Charitable Giving: Suggest charitable donations as they can be tax-deductible and reduce AGI, potentially resulting in lower taxation of Social Security benefits.

Legacy and Estate Planning

Your philosophy on legacy and estate planning is crucial in this context. Taxes on Social Security benefits are part of the broader financial picture. Think about legacy goals, including:

  • Inheritance Planning: Ensure that your heirs understand the tax implications of inheriting your retirement assets.

  • Charitable Giving: Explore ways to support charitable causes and reduce potential estate taxes.

  • Gift and Estate Tax Planning: Discuss strategies for reducing estate tax liabilities to preserve more of your wealth for your heirs.


The taxation of Social Security benefits is an important consideration in retirement planning. Engaging with a Certified Financial Planner (CFP®) is a pivotal step in securing one's financial future. A CFP® is not just any financial advisor; they have undergone rigorous training and examinations to earn their certification, ensuring they possess the expertise to provide comprehensive financial advice tailored to individual needs. They adhere to a strict code of ethics, which emphasizes transparency, integrity, and putting the client's interests first. To review your financial challenges with a professional CONTACT US!

Investing involves risk and possible loss of principle capital. No advice may be rendered by Wise Wealth Partners, LLC unless a client service agreement is in place. You should consult with your own professional before engaging in any transactions. © 2023 Wise Wealth Partners, LLC. All rights reserved.


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