What is the maximum percentage of social security benefits that can be considered taxable income?

Social Security benefits can indeed be partially taxable, and the maximum percentage that can be included in taxable income is 85%. This percentage applies based on the taxpayer's combined income, which includes adjusted gross income, nontaxable interest, and half of the Social Security benefits received.

If the taxpayer's combined income exceeds certain thresholds, up to 85% of their Social Security benefits may be subjected to federal income tax. It's important for taxpayers to understand these thresholds and the implications for their tax filing, as many are often surprised to learn that benefits, which are typically viewed as non-taxable, can indeed affect their overall taxable income.

Although there are limits on how much of the benefits can be taxed, the complexity of the tax calculation means that there is a cap at 85%, beyond which no additional portion of the Social Security benefits will become taxable. Knowing this percentage is crucial for financial planning and accurate tax filing for retirees and others receiving Social Security.