Tax on Social Security and a 401(k)

Social Security is taxed on the same combined-income formula as SSDI: half the benefit plus your other income, tested against a threshold, and never more than 85% of the benefit taxable however large your income.

A 401(k) or traditional IRA withdrawal is ordinary income, and it counts in that formula. So every dollar you draw does two things: it is taxed itself, and it can drag more of your Social Security into being taxed alongside it. Inside the phase-in range that produces marginal rates noticeably higher than the bracket you appear to be in.

The state layer is the other half of the answer. Most states do not tax Social Security at all, twelve do, and living in one of them changes the arithmetic. Select your state below and the calculation applies the right treatment.

Calculator

The states that tax Social Security

12 states tax Social Security benefits. Everywhere else leaves them alone entirely, whatever your income:

• Colorado
• Connecticut
• Kansas
• Minnesota
• Missouri
• Montana
• Nebraska
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virginia

Where this comes from

The rules on this page that are specific rather than general are cited below. Follow a link to read the provision itself rather than taking our word for it:

• Social Security and SSDI are taxed on a combined-income formula counting half the benefit plus other income, to a maximum of 85%IRC 86(a)-(b)

Related

• All benefit calculators
• How much of your SSDI is taxable
• Is your short-term disability benefit taxable?
• Is your long-term disability benefit taxable?
• SSDI and long-term disability together
• Is workers’ compensation taxable?
• Household calculator

General information about how these benefits are taxed, not tax advice. Disability and benefit taxation turns on facts about your policy and your household that this page does not have, check with a tax professional before relying on a figure here.