Summary: Tips on reducing taxes on Social Security benefits by managing income levels and tax rates. Neutral

From Yahoo Finance: 2025-04-19 08:30:00

Approximately 40% of households pay taxes on their Social Security benefits, according to the Social Security Administration. Managing them effectively could save you money. To reduce taxes, consider working with a financial advisor. Social Security taxes are based on income, with up to 85% of benefits subject to taxes.

Your combined income determines how much of your Social Security benefits are taxable. Taxes are calculated using combined income and taxable income figures. You can reduce taxes by lowering your taxable income or qualifying for a lower tax rate. Strategies include Roth IRA withdrawals and structured withdrawals to stay within lower tax brackets.

If your combined income is below certain thresholds, you may not pay taxes on your benefits. Depending on your income level, you could owe taxes on up to 85% of your benefits. Requesting federal withholding can help manage tax impact. Structuring withdrawals around tax tiers can also reduce tax liability.

Reducing taxes on Social Security benefits requires lowering taxable income or tax rate. Strategies include Roth IRA withdrawals, capital gains conversions, and structured withdrawals. Understanding the tax tiers and planning ahead can help minimize taxes owed on Social Security income.

Read more: How Can I Cut Taxes on My $3,300 Monthly Social Security Benefit?