Overview

• Social Security benefits are a major source of income for many retirees, with some relying on it for over 90% of their income.
• Federal taxation on Social Security is determined by combined income, which includes half of Social Security benefits, adjusted gross income, and nontaxable interest income.
• Nine states—Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia—still tax Social Security benefits, though some are phasing out these taxes.
• Working while collecting Social Security before reaching full retirement age can result in benefit reductions if earnings exceed certain thresholds.
• Spousal benefits can be affected if the primary beneficiary suspends or withdraws their Social Security application, potentially reducing the household's total benefits.