By Lee Guthrie
Tahlequah Daily Press, Okla.
(TNS)
The age of retirement for an individual to receive full Social Security benefits is now 67, and how benefits are taxed depends on factors such as whether beneficiaries continue working and their filing status.
Anthony Hughes, a Tahlequah CPA, said many taxpayers do not understand how taxes and Social Security benefits work, and it keeps coming up when they file their returns.
Questions that surface are regarding tax responsibility when receiving Social Security payments and continuing to work; whether there are limits to what a person can make while receiving Social Security; and whether people are taxed on Social Security.
“You generally can’t draw until you are 62, and you generally don’t get your full Social Security until you are—it was 65, but is now 67,” Hughes said. “You can wait until you are 70, but after that, you have to start drawing. The longer you wait, the bigger the check is every month.”
He said, as an example, a person starts drawing Social Security at age 62 and draws $1,000 a month. If that person can wait until turning 63, the monthly check would be $1,080. This is an 8% increase until the person reaches 70, and after that, there is no requirement to claim.
“The amount you will receive in gross is higher, the longer you wait,” Hughes said. “The problem is, it takes time to make up all the payments you got before.”
The average estimate, back when the ages were 62 and 65, is it generally takes between eight and 12 years to make up the difference to break even, by taking it early instead of later.
“Today, when looking at 62 and 67, you are talking 15-20 years to make up the difference of that five years,” Hughes said. “You get more per month the more months and years you wait to start collecting.”
The first part to consider is how much the person actually gets per month; the second part is earned income—any income on which a person pays Social Security or Medicare taxes.
“If a person goes above a certain limit of earned income, that’s when you start losing the actual amount you are going to receive,” Hughes said.
In 2026, the Social Security earnings limit for workers under full retirement age increases to $24,480 per year—$2,040 monthly, with $1 in benefits withheld for every $2 earned above this limit. For those reaching FRA in 2026, the limit is $65,160 per year—$5,430 monthly—through the month before FRA, with $1 withheld for every $3 over. This information is found on the website for the Social Security Administration, “Receiving Benefits While Working.”
The reduced benefits are not lost for the beneficiary; rather it gets spread out over the course of receiving Social Security benefits after the age of full retirement.
“I tell my clients they should wait to start drawing Social Security until the year after their final paycheck,” Hughes said. “Everything up through that final paycheck may reduce how much you qualify for to actually receive.”
The next question Hughes addressed was how much of the Social Security a person receives is taxable. Social Security is taxable if a person has enough other income to make it taxable.
“Take half of the gross Social Security you receive in a year—that’s before any Medicare premiums or federal withholdings, and you have to ask the feds to take out these deductions, which is done to maximize withholdings—and add it to all other income and deductions through adjusted gross income, including non-taxable interest income. If that number is more than $25,000 for single or $32,000 for married joint, or zero for married separate, then your Social Security starts to become taxable.”
The taxable portion begins at a $1 to $2 ratio; for every $2 a person has adjusted income or deductions above the allowed maximum, $1 of a person’s Social Security is taxable.
On the IRS’s website, in an article titled, “IRS reminds taxpayers their Social Security benefits may be taxable,” it states 50% of a taxpayer’s benefits may be taxable if they are: filing single, head of household or qualifying widow or widower with $25,000 to $34,000 income; married filing separately and lived apart from their spouse for all of 2020 with $25,000 to $34,000 income; if married filing jointly with $32,000 to $44,000 income.
Up to 85% of a taxpayer’s benefits may be taxable if they are: filing single, head of household or qualifying widow or widower with more than $34,000 income; married filing jointly with more than $44,000 income; married filing separately and lived apart from their spouse for all of 2021 with more than $34,000 income; or married filing separately and lived with their spouse at any time during 2021, states the article.
The idea behind the ratio is a person does not pay Social Security and Medicare on the half an employer puts into the fund through deductions on a paycheck.
“You did not pay tax on what your employer put in, but don’t assume the employer paid it for you; it was still part of your compensation,” Hughes said. “For them, it is all compensation. If you go over enough, once it hits 50%, it can still continue to go up at a rate of 85%, until 85% is taxable.”
A couple filing married and joint can easily make enough money in combined earnings to get to an 85% tax rate on the benefits, Hughes said. He said over his career of 40 years, the $25,000 and $34,000 limits have not changed.
For a single person receiving $33,000 in wages and $26,700 in Social Security, for a total income of $59,700, half of Social Security is $13,350, and added with the $33,000, the total is $46,350—and the person has gone over the allowable $25,000. For every $2 a person earns above the allowed maximum, $1 of a person’s Social Security is taxable, then 85%.
Some tax changes in President Donald Trump’s One Big Beautiful Bill Act are helpful, and not just for seniors. Specific to seniors is the $6,000 deduction now allowed even if doing standard deductions, along with the tip and overtime benefits.
“Overtime premium is deductible up to $12,500 for single, $25,000 for married, filing joint,” Hughes said.
Photo credit: Douglas Rissing/iStock
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© 2026 the Tahlequah Daily Press (Tahlequah, Okla.). Visit www.tahlequahdailypress.com. Distributed by Tribune Content Agency LLC.
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