Do You Have to Pay Federal & State Tax on Social Security Earnings?

Kansas and Connecticut don't levy Social Security taxes on lower income taxpayers.
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Whether you pay federal and state taxes on Social Security income depends on your location, age, income and filing status. The federal government taxes a portion of Social Security benefits if taxpayer income exceeds an allotted amount. Some states don't tax Social Security at all, while others allow exemptions based on age and income.


Federal Taxation

Depending on your total annual income, the federal government may or may not tax your Social Security benefits. For the 2014 tax year, single tax filers pay no tax on Social Security benefits if provisional income is less than $25,000. Married filers won't pay if provisional income is less than $32,000. For the purposes of Social Security taxation, provisional income means income from all other sources -- including tax exempt interest and other income that's typically excluded -- plus one half of Social Security benefits. For example, say you're a single filer who received $12,000 in Social Security benefits and $10,000 in income from other sources. Your provisional income is $10,000 plus $6,000. Since $16,000 is less than $25,000, you won't pay federal taxes on benefits.


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How Much is Taxable

If you do have to pay federal taxes on your Social Security benefits, the amount that's taxable again varies based on income. If a single filer's provisional income is between $25,000 and $34,000, no more than half of his benefits can be taxed. The same rule applies for married filers with provisional income between $32,000 and $44,000. You'll pay income tax on either half of your benefits or on half of the excess of provisional income over your trigger point, whichever is less.


State Taxation

Some states tax Social Security benefits while others do not. About half of the states in the U.S. do not levy any sort of tax on Social Security benefits. The rest do, but individual taxation policies vary. For example, Social Security benefits are exempt in Kansas if your adjusted gross income is less than $75,000. New Mexico taxes benefits but exempts taxes for taxpayers that are over 65. Contact your state's tax board for specific details.

Social Security Tax Withholding

If you suspect that you'll owe taxes on Social Security benefits, you may want to withhold some taxes from your payments. Taxpayers currently receiving benefits can request a federal tax withholding by completing form W-4V. You can download the form on the Social Security Administration website or call the IRS and request a physical form via mail. Taxpayers can choose to have 7 percent, 10 percent, 15 percent or 25 percent of benefits withheld for federal taxes.