Income Taxes on Social Security Benefits

by Patrick J. Purcell
Issue Paper No. 2015-02 (released December 2015)
Chart 1. Percentages of Social Security beneficiaries filing income tax returns and owing income tax on their benefits, 2010 and projected quinquennially 2015–2050
Year Filing tax returns Owing income tax
2010 72.0 47.1
2015 72.0 52.0
2020 71.8 55.6
2025 71.5 57.4
2030 70.6 57.9
2035 69.7 57.7
2040 69.0 57.5
2045 68.2 56.8
2050 67.5 56.2
SOURCE: Author's calculations using MINT7.
Chart 2. Mean percentage of Social Security benefit income owed as income tax: Three beneficiary-family categories, 2010 and projected quinquennially 2015–2050
Year All beneficiary families Families filing a tax return Families with taxable benefit income
2010 6.4 8.2 11.7
2015 7.2 9.2 11.9
2020 8.3 10.5 12.8
2025 9.3 11.7 13.7
2030 9.7 12.2 14.0
2035 10.1 12.6 14.3
2040 10.4 12.9 14.4
2045 10.7 13.3 14.7
2050 10.9 13.4 14.7
SOURCE: Author's calculations using MINT7.
Chart 3. Median percentage of Social Security benefit income owed as income tax: Three beneficiary-family categories, 2010 and projected quinquennially 2015–2050
Year All beneficiary families Families filing a tax return Families with taxable benefit income
2010 0.0 6.6 10.4
2015 0.5 7.7 11.1
2020 2.1 8.8 11.7
2025 3.9 9.7 12.1
2030 4.8 9.9 12.1
2035 5.1 10.2 12.1
2040 5.1 10.3 12.1
2045 4.8 10.3 12.1
2050 4.8 10.3 12.2
SOURCE: Author's calculations using MINT7.
Chart 4. Percentage of Social Security benefit income that is owed as income tax among beneficiary families: Selected percentiles, 2010 and projected quinquennially 2015–2050
Year 90th percentile 75th percentile 50th percentile (median) 25th percentile
2010 15.0 9.7 0.0 0.0
2015 16.1 11.4 0.5 0.0
2020 17.0 12.4 2.1 0.0
2025 17.6 13.0 3.9 0.0
2030 17.4 13.0 4.8 0.0
2035 17.6 13.0 5.1 0.0
2040 17.4 13.0 5.1 0.0
2045 17.5 13.0 4.8 0.0
2050 17.3 12.9 4.8 0.0
SOURCE: Author's calculations using MINT7.
Chart 5. Mean percentage of Social Security benefit income owed as income tax among beneficiary families, by total-income quartile: 2010 and projected quinquennially 2015–2050
Year Fourth quartile Third quartile Second quartile First quartile
2010 13.9 5.0 0.5 0.0
2015 14.0 6.9 1.1 0.1
2020 14.8 8.6 2.0 0.1
2025 15.6 9.8 2.8 0.2
2030 15.7 9.8 3.3 0.4
2035 15.9 10.3 3.6 0.5
2040 15.9 10.2 3.8 0.6
2045 16.2 10.0 4.1 0.8
2050 16.1 10.1 4.3 1.1
SOURCE: Author's calculations using MINT7.
Chart 6. Median percentage of Social Security benefit income owed as income tax among beneficiary families, by total-income quartile: 2010 and projected quinquennially 2015–2050
Year Fourth quartile Third quartile Second quartile a First quartile a
2010 12.4 3.7 0.0 0.0
2015 13.2 7.1 0.0 0.0
2020 13.8 9.3 0.0 0.0
2025 14.5 10.3 0.0 0.0
2030 14.3 10.2 0.0 0.0
2035 14.3 10.5 0.0 0.0
2040 14.2 10.3 0.0 0.0
2045 14.2 9.9 0.0 0.0
2050 14.2 9.9 0.0 0.0
SOURCE: Author's calculations using MINT7.
a. Because the projected median percentages for beneficiary families in the second income quartile are zero in every year, the projected median percentages for beneficiary families in the first income quartile are necessarily also zero in all years.