Key Points
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The government can tax up to 85% of your Social Security benefits at your ordinary income tax rate.
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The 2027 Social Security COLA could put you at greater risk of owing these taxes next year.
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Adjusting your spending habits may help some people avoid benefit taxes.
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With 2027 just a couple months away, you might be watching your budget a bit more closely than usual. The holidays often bring increased spending, and your marginal tax bracket for the year may not be locked in yet. It depends on your taxable income over the last few months.
Seniors on Social Security also have to worry about where their provisional income might wind up, as this determines whether they’ll owe taxes on their Social Security benefits. Even if you manage to avoid these this year, you may have to brace yourself for them in 2027.
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How provisional income affects your Social Security benefits
The government may tax up to 85% of your Social Security benefits at your ordinary income tax rate, depending on your provisional income and marital status. Your provisional income is your adjusted gross income (AGI), plus any nontaxable interest and half your annual Social Security benefit. The table outlines what percentage of your benefits could be taxable in 2026:
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Marital Status
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0% of Benefits Taxable If Provisional Income Is Below:
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Up to 50% of Benefits Taxable If Provisional Income Is Between:
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Up to 85% of Benefits Taxable If Provisional Income Exceeds:
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Single
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$25,000
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$25,000 and $34,000
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$34,000
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Married
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$32,000
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$32,000 and $44,000
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$44,000
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Data source: Social Security Administration.
These numbers aren’t indexed for inflation, so they’ll apply in 2027 as well. Even if you don’t owe any benefit taxes this year, rising costs and the 3.6% 2027 Social Security cost-of-living adjustment (COLA) could put you in danger of owing these taxes next year.
How to avoid Social Security benefit taxes
It’s sometimes possible to avoid Social Security benefit taxes by keeping your spending to a minimum. If you have Roth retirement savings, you can rely more heavily upon those in the last few weeks of the year to keep your AGI down. You’ve already paid taxes on these funds, so you usually don’t owe any when you withdraw funds from these accounts.
Sometimes, it isn’t possible to avoid benefit taxes, though. In that case, it’s important to plan for them. If you’re worried about a possible tax bill, check with an accountant who can give you personalized advice on how much you might owe. Try to set aside some of your savings for the tax bill if need be.
After you’ve got that sorted out, put together a plan for how you’ll tackle your 2027 benefit taxes. If you’d like, you can contact the Social Security Administration and request that it withhold taxes from your paychecks up front so you’re not caught off guard by a surprise bill later.
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