How to Lower Your Social Security Taxes

Lowering your Social Security taxes can be as simple as putting money into a tax-deferred account where income doesn’t have to be drawn right away. There are options where that becomes more complicated depending on where you’re at on the Social Security income threshold.

Oftentimes, Social Security benefit earners don’t have a full grasp on their potential to be taxed on the hard-earned benefits they receive. If they exceed the general income thresholds as established by the Social Security Administration (SSA), they could find themselves paying tax on more than 50% of their benefits in certain cases. Fortunately, there are strategic ways to lower your tax burden.

Creating Tax-Deferred Income

As Investopedia points out, you could convert reportable investment income into tax-deferred income (such as from an annuity), which is not required to be reported on the 1040 form until it is withdrawn. Money growing within an annuity (with the interest reinvested back into the annuity) will effectively show the reportable interest of $0 when compiling reportable income. 

Annuities become taxable income when distributions begin and if you’re not spending all of the interest paid from a Certificate of Deposit or another taxable vehicle, you could benefit from this partial move into a tax-deferred account. 

Retirement Account Earmarking 

Another possible option could be to just work a bit less, especially if you’re near the initial tax threshold. While the Investopedia example includes moving taxes into the annuity and earning a bit less, you could also simply take fewer hours or a slightly smaller salary to remain under a particular threshold to be taxed less.

Social Security Tax Thresholds

As a reminder, if you file as an individual and your combined income is between $25,000 and $34,000, you may be taxed up to 50%. That number goes up to 85% for incomes more than $34,000. For joint filers, the numbers are between $32,000 and $44,000 for that 50% mark and $44,000+ for 85% potential taxation.


Social Security taxes can be incredibly complex, especially for those with significant retirement assets and those who may have had an initial approval of coverage, but were later denied for any number of reasons. In eastern Washington and Idaho, clients trust Schott Law with their needs when it comes to Social Security claims. Call (509) 328-5789 to learn more and schedule a free consultation.