The combined income formula
This combined income figure is compared to the thresholds below to determine how much of your Social Security is included in taxable income. Note that this is not the same as your regular AGI — the formula specifically adds back 50% of your SS benefit regardless of whether it ends up being taxed.
| Filing status | Combined income | SS benefit taxed at |
|---|---|---|
| Single | Below $25,000 | 0% — no Social Security tax |
| Single | $25,000 – $34,000 | Up to 50% of benefits taxable |
| Single | Above $34,000 | Up to 85% of benefits taxable |
| Married filing jointly | Below $32,000 | 0% — no Social Security tax |
| Married filing jointly | $32,000 – $44,000 | Up to 50% of benefits taxable |
| Married filing jointly | Above $44,000 | Up to 85% of benefits taxable |
🔄 Use Roth distributions instead of IRA withdrawals
Qualified Roth IRA withdrawals do not count toward combined income. Replacing traditional IRA distributions with Roth distributions in retirement can keep your combined income below the SS taxation thresholds — potentially reducing the taxable portion of SS from 85% to zero.
🛡 Use IUL policy loans as tax-free income
Policy loans from an Indexed Universal Life policy are not taxable income and do not enter the combined income formula. High-income retirees who built IUL cash value during their working years can draw tax-free retirement income from the policy rather than from a traditional IRA — keeping SS tax exposure low.
🤝 Deploy QCDs to reduce AGI
Qualified Charitable Distributions directly reduce your AGI by satisfying RMDs without adding to taxable income — which in turn reduces your combined income calculation and can lower the taxable portion of your Social Security benefit.
📅 Time Social Security claiming strategically
Delaying Social Security to age 70 increases your monthly benefit by approximately 8% per year. In the years you delay claiming, you may have lower combined income — creating a window to execute Roth conversions at lower rates before SS benefits begin adding to your combined income baseline.
📈 Harvest capital gains at 0% in low-income years
In years where your combined income falls below SS taxation thresholds, realize long-term capital gains at 0% and step up your cost basis in taxable accounts. This permanently reduces future taxable gain — without triggering SS taxation.