Many retirees are surprised to learn that a portion of their Social Security benefits can be taxed, and that the tax often depends less on how much they receive from Social Security than on where the rest of their income comes from. Withdrawals from a Roth IRA sit outside the formula the government uses to decide how much of a benefit is taxable, while withdrawals from a traditional retirement account sit squarely inside it. That single distinction can determine whether a benefit check arrives largely tax-free or with up to 85% of it exposed to income tax.
How combined income decides the tax on benefits
The figure that drives the calculation is called combined income, defined as adjusted gross income plus any tax-exempt interest plus half of the year’s Social Security benefits. The result is compared against fixed thresholds to determine what share of benefits is taxable, and those thresholds have never been indexed for inflation, so they reach more retirees each year as incomes drift upward.
For a single filer, combined income between $25,000 and $34,000 makes up to 50% of benefits taxable, and combined income above $34,000 makes up to 85% taxable, according to the Internal Revenue Service. For a married couple filing jointly, the corresponding bands are $32,000 to $44,000 for the 50% tier and above $44,000 for the 85% tier, and the Social Security Administration applies the same figures. The narrow width of those bands means even a middle-income retiree can see a large share of benefits pulled into taxable income.
Reaching the 85% tier does not mean 85% of a benefit is taken in tax; it means up to 85% of the benefit is added to taxable income and then taxed at the retiree’s ordinary rate. The lower tier works the same way, adding up to half of a benefit to taxable income once combined income crosses the first threshold, so the effect builds gradually rather than switching on all at once. Still, the impact is real, and because the same dollar of other income both raises adjusted gross income and can push benefits into a higher taxable share, a retirement withdrawal can carry a hidden second cost beyond the tax on the withdrawal itself.
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Why qualified Roth withdrawals stay out of the calculation
A qualified withdrawal from a Roth IRA is tax-free, and just as importantly it is not counted in adjusted gross income. Because it never enters adjusted gross income, it also never enters combined income, so drawing on a Roth to cover spending does not push any Social Security benefits toward taxation. A retiree who funds part of a year’s expenses from a Roth can keep combined income below a threshold that traditional withdrawals alone would have breached.
That property makes the Roth a tool for managing the tax on benefits, not merely a tax-free source of cash. A withdrawal is generally qualified once the account has been open at least five years and the owner is over 59½, conditions most retirees meet. The account also carries no lifetime required distributions for the original owner, so a retiree is never forced to pull Roth money that would otherwise sit untouched and undisturbed.
The distinction also shapes when to convert. Some retirees move money from a traditional IRA to a Roth in lower-income years, paying tax on the conversion up front so that later withdrawals stay out of combined income. A conversion itself raises adjusted gross income in the year it is done, so the timing becomes a balance between a tax bill now and lighter taxation of benefits later.
How traditional withdrawals can pull benefits into the 85% band
Traditional IRA and 401(k) withdrawals are the mirror image. They are taxed as ordinary income and are fully included in adjusted gross income, so every dollar withdrawn also lifts combined income and can move a larger share of Social Security benefits into the taxable column, a calculation the agency walks through in its worksheet on the taxability of benefits. A retiree relying entirely on traditional accounts may find that a routine withdrawal, or a required minimum distribution, tips benefits from the 50% tier into the 85% tier.
Tax-exempt municipal bond interest holds a related surprise. Although the interest itself is free of federal income tax, it is added back into combined income, so it can still push Social Security benefits toward the taxable tiers even while it escapes tax on its own. The formula reaches income that other parts of the code leave alone, which is why the worksheet the agency supplies for the calculation asks a filer to add such items back in before measuring the total against the thresholds.
The practical upshot is a case for blending sources. Drawing from traditional accounts up to the point where benefits would start facing heavier taxation, then turning to a Roth for the rest, can hold combined income in check. The Internal Revenue Service and the Social Security Administration both publish the combined-income formula and the thresholds that govern it, and those figures, unchanged for decades, are what make the source of a retiree’s next withdrawal a decision with a tax consequence attached.
This article was produced with AI assistance and reviewed against primary sources by The Money Overview editorial team.
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