Retirement Social Security

The Stealth Savings Move That Could Keep Your Social Security Tax-Free

Social Security benefits can be subject to taxes, but there's a key savings move that could let you off the hook.

By Maurie Backman , Edited by Laura Hohenstein

Updated Sept. 28, 2026

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It's easy to argue that Social Security is one of the most important benefits for seniors today. Many retirees would not be able to cover their living costs if it weren't for those monthly checks.

Some seniors, however, are shocked to learn that Social Security benefits can be taxable in retirement. That may seem counterintuitive since Social Security benefits are earned by paying taxes on wages, but it's true.

However, not all Social Security recipients have to pay taxes on their monthly benefits, and choosing the right home for your retirement savings could spell the difference between having your Social Security taxed or not.

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How taxes on Social Security benefits work

Social Security benefits aren't automatically subject to taxes. Whether those taxes on benefits apply hinges on provisional income.

Provisional income is calculated as the sum of modified adjusted gross income (MAGI) plus 50% of your annual Social Security benefits. If you're single with a provisional income that falls between $25,000 and $34,000, up to 50% of your Social Security benefits could be taxed. If your tax status is married filing jointly and you have a provisional income between $32,000 and $44,000, up to 50% of your Social Security benefits may be taxed.

Once your provisional income exceeds $34,000 as a single tax-filer, you could be taxed on up to 85% of your Social Security benefits. And if your provisional income is above $44,000 as a married couple filing jointly, up to 85% of your Social Security benefits could be taxed as well.

The provisional income thresholds were established decades ago and do not get an inflation adjustment. So as Social Security benefits increase due to the program's annual cost-of-living adjustments, more people are likely to owe taxes on those monthly checks.

The One Big Beautiful Bill Act introduced a $6,000 senior tax deduction that's currently allowing a good number of recipients to avoid having their Social Security benefits taxed. But that deduction is only temporary, and taxes on Social Security still exist.

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Retirement account withdrawals count toward provisional income

Ideally, you'll be retiring with some savings to supplement your Social Security benefits. But you should know that if you have money in a traditional IRA or 401(k) plan, your withdrawals are taxable.

That means those withdrawals get added to your MAGI and count toward provisional income. And because the provisional income thresholds are so low, even modest retirement plan withdrawals could push you to the point of having your benefits taxed.

Furthermore, once you're old enough to be on the hook for required minimum distributions (RMDs), you may end up owing taxes on your Social Security benefits due to those mandatory withdrawals. In other words, if you live frugally, you may be able to cover your costs in retirement without tapping your retirement savings. But with a traditional retirement account, at some point the IRS is going to force you to withdraw from savings whether you want to or not.

Roth account withdrawals are the one exception

While withdrawals from a traditional IRA or 401(k) count toward provisional income, withdrawals from a Roth retirement account do not. Roth IRA or 401(k) withdrawals are not taxable. As such, they do not count toward your MAGI.

You could take $100,000 out of a Roth IRA and still end up with a provisional income that's low enough for your benefits to avoid taxation.

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A Roth conversion could help you keep more Social Security

If you're nearing retirement and you have your savings in a traditional retirement account, don't assume you're doomed to pay taxes on your Social Security benefits. You may be able to pull off a Roth conversion before starting Social Security, or even after.

A Roth conversion allows you to roll funds from a traditional retirement account into a Roth IRA. When you move those funds over, you pay taxes that same year. In exchange, you get all of the benefits a Roth IRA has to offer, including tax-free withdrawals and no RMDs.

From a Social Security standpoint, that's important. Because Roth withdrawals don't count toward provisional income, a Roth conversion could be your ticket to keeping more of your Social Security away from the IRS so you can enjoy those benefits yourself.

Bottom line

A good number of seniors today are living on just Social Security. If you're in that situation, your provisional income may not be high enough to subject you to taxes on your monthly benefits.

But if you do have outside income, you could end up losing a chunk of your Social Security to taxes. So if you want to avoid that, it could pay to do a Roth conversion.

Just remember that Roth conversions are a taxable event, so if you're moving a large sum of money from a traditional retirement account to a Roth IRA, it's a good idea to give yourself several years to complete your conversion. If you move a large sum of money into a Roth IRA in a single year, that year's tax bill could be huge, and you could end up converting your savings at a very high tax rate.

A better bet is to spread out your conversion across several tax years. That could minimize the tax blow and let you more fully enjoy the benefits of a Roth conversion.

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