Step‑by‑step example: compute taxable Social Security for a retired couple with $20,000 SS benefits and $30,000 pension income.

1. What "combined income" means and why it matters

The taxability of Social Security is not determined by the benefit amount alone but by “combined income,” defined for federal purposes as adjusted gross income plus nontaxable interest plus one‑half of Social Security benefits; that combined figure is compared to statutory base amounts that trigger partial taxation ^{[1] [2]}. For married couples filing jointly those statutory thresholds begin at $32,000 for the 50% range and reach $44,000 where up to 85% of benefits can become taxable, so calculating combined income is the crucial first step ^{[2] [5]}.

2. Step‑by‑step arithmetic for the example couple

Start with pension income of $30,000 (treated as taxable pension and therefore included in AGI), add zero nontaxable interest in this example, and add one‑half of the Social Security benefit ($20,000 × 0.5 = $10,000) to arrive at combined income of $40,000 ^[1]. Because $40,000 falls between $32,000 and $44,000 for married couples filing jointly, up to 50% of Social Security benefits can be included in taxable income; the IRS computation limits the taxable amount to the smaller of 50% of benefits or the excess of combined income over the lower base amount ^{[1] [2]}. Fifty percent of the $20,000 benefit is $10,000; the excess over the $32,000 base is $40,000 − $32,000 = $8,000; the lesser figure ($8,000) is the taxable portion of Social Security for this couple ^[1].

3. Resulting federal taxable income and immediate implications

Add the taxable portion of Social Security ($8,000) to the $30,000 taxable pension to get $38,000 of income subject to ordinary federal tax rates before applying the standard deduction, any senior deduction, credits or other adjustments ^{[1] [2]}. The 2026 standard deduction for married filing jointly is indexed to inflation and noted in guidance as $32,200, but many retirees may also be eligible for the temporary senior deduction that can further reduce taxable income — eligibility rules and phaseouts apply and could materially change net tax owed ^{[2] [3] [4]}.

4. Caveats, state taxes and legislative uncertainty

State treatment varies widely: several states do not tax Social Security while a handful still do or impose limited subtractions, so a resident’s state income tax could raise or lower the effective tax hit described here ^{[6] [7]}. Moreover, legislative changes in late 2025 created a temporary senior deduction that reduces many seniors’ federal taxable income through 2028; separate proposed bills could eliminate federal taxation of benefits entirely, but as of early 2026 those proposals remained unsettled, so this calculation reflects current law and IRS procedures ^{[4] [6]}. Finally, Publication 915 and SSA guidance explain the mechanical calculation in examples and should be consulted for variants (for example, if other taxable income or nontaxable interest exists) ^{[1] [8]}.

5. Practical next steps implied by the calculation

For retirees in comparable circumstances, the arithmetic above shows how relatively modest pension income can push a sizeable share of Social Security into the tax base, but it also highlights the immediate value of deductions and credits (including the new senior deduction) and the importance of state tax rules; professional tax preparation or use of the IRS worksheet in Publication 915 will produce the precise tax due after deductions and credits ^{[1] [3]}. Policymakers’ choices about the senior deduction and any broader repeal would change the outcomes for millions; current reporting notes both the fiscal cost and the political debate surrounding those changes ^{[9] [4]}.