Overview
- Provisional income is the metric the IRS uses to decide when Social Security is taxable and it includes all taxable income, half of your Social Security benefit, and some nontaxable items such as municipal bond interest.
- Once provisional income exceeds the fixed thresholds of $25,000 for single filers or $32,000 for joint filers, at least a portion of benefits becomes subject to federal tax.
- Qualifying Roth distributions are neither taxable nor counted in provisional income, so taking money from a Roth IRA or Roth 401(k) can keep more of a retiree’s Social Security benefit untaxed.
- Because those provisional-income thresholds have not been indexed to inflation and have not changed in decades, ordinary wage growth and rising incomes make it more likely future retirees will owe tax on benefits without Roth planning.
- For people near retirement, using Roth distributions can protect current benefit income, and for younger workers favoring Roth contributions now could reduce the share of Social Security that becomes taxable later, while also shaping pressure for future policy changes.