What Is Provisional Income?

Provisional Income Explained in Less Than 5 Minutes

A woman tries to calculate her taxes
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Definition

Your provisional income determines whether you’ll have to pay federal income tax on a portion of your Social Security benefits.

Your provisional income is an amount that determines whether you’ll have to pay federal income tax on a portion of your Social Security benefits. It's a combination of your adjusted gross income, any tax-exempt income you might have, and half your Social Security or Railroad Retirement Tier I benefits.

Key Takeaways

  • Your provisional income is your adjusted gross income plus half your Social Security benefits, plus any tax-exempt income you received over the course of the tax year.
  • Your provisional income is compared to certain thresholds to determine whether any of your Social Security benefits will be taxable at the federal level.
  • You could end up paying taxes on 50% to 85% of your benefits, depending how much your provisional income exceeds these limits.
  • The thresholds are different for married and single taxpayers to reflect an additional earner.


How Provisional Income Works

The Internal Revenue Service (IRS) uses provisional income to determine whether you’ll have to pay federal income tax on part of your Social Security benefits. You'll compare this income to certain thresholds set by the Internal Revenue Code (IRC) after you've determined how much it is. You could pay taxes on your Social Security benefits if your provisional income exceeds these thresholds or limits for your filing status:

  • $25,000 if you’re single, head of household, a qualifying widow(er), or married filing separately and you lived apart from your spouse for the entire tax year.
  • $32,000 if you’re married and filing a joint tax return.
  • $0 if you’re married, filing a separate return, and lived with your spouse at any time during the tax year.

An Example of Provisional Income

You would start with your gross income to calculate your provisional income. This includes all income you earned during the tax year from wages, dividends, pensions, and self-employment. Then you would subtract any allowable adjustments to this income, which appear in Part II of the 2022 Schedule 1 that you'll file with your Form 1040 tax return in 2023. This will tell you your adjusted gross income.

Next, add in any tax-exempt income you received. This might include tax-exempt interest from certain U.S. savings bonds and foreign earned income. Finally, add 50% of any Social Security and Railroad Retirement Tier I benefits you received during the tax year.

Note

The total amount of your Social Security benefits will appear in box 5 of Form SSA-1099, which you should receive from the Social Security Administration in January for the previous year. For example, you’ll receive Form SSA-1099 in January 2023 if you received benefits in 2022.

Let’s say you collected $5,000 in Social Security benefits, $12,500 in wages because you’re still working part time, and $6,000 in dividend income from investments. You’d add those three numbers together to arrive at your provisional income: $2,500 (half your benefits) + $12,500 + $6,000 for a total of $21,000.

How To Calculate Taxes on Your Provisional Income

You must compare 50% of your benefits received to 50% of your provisional income that exceeds the thresholds established by the IRS. You’ll pay tax on whichever amount is less. It gets more complicated if your provisional income exceeds a second threshold: You could pay tax on up to 85% of your benefits. Here's how it breaks down:

Provisional income thresholds for single taxpayers
Provisional Income Taxable Social Security Benefits
Less than $25,000 None
$25,000 to $34,000 Lesser of a) 50% of benefits or b) 50% of provisional income above $25,000 (up to $4,500)
More than $34,000 Lesser of a) 85% of benefits or b) 85% of provisional income above $34,000 plus the amount from the box above
Provisional income thresholds for married taxpayers
Provisional Income Taxable Social Security Benefits
Less than $32,000 None
$32,000 to $44,000 Lesser of a) 50% of benefits or b) 50% of provisional income above $32,000 (up to $6,000)
More than $44,000 Lesser of a) 85% of benefits or b) 85% of provisional income above $44,000 plus the amount from the box above

You’ll pay tax on the lesser of 85% of your provisional income or 85% of your Social Security benefits if you file a separate married return and you lived with your spouse at any point during the tax year. But in no case would you have to pay income tax on 100% of your benefits, such as you would on pension income or income you receive because you’re still working.

Note

These income thresholds have not been adjusted for inflation since their inception in 1984, although the taxable portions of benefits were increased to 50% and 85% under the terms of the Omnibus Budget Reconciliation Act of 1993.

The federal government directs taxes that are paid on Social Security benefits to the Old Age and Survivors Insurance Trust Fund, the Disability Insurance Trust Fund, and the Railroad Retirement System, depending on the source of your benefits. Taxes resulting from the 85% rule go toward funding the Medicare Hospital Insurance Trust Fund.

How To Pay Taxes on Your Benefits

These computations are complicated, but the IRS provides a Social Security benefits worksheet to help you calculate your provisional income and your applicable tax percentage in its 1040 and 1040-SR Instructions for tax year 2022, the return you'll file in 2023.

Note

Most tax preparation software will calculate your provisional income and any resulting tax for you. A reputable tax professional will do so as well and could suggest tax-planning measures to help you avoid having too much provisional income in subsequent years.

You can ask the Social Security Administration to withhold taxes from your benefits if you’re concerned that your provisional income will put you over the thresholds, or you can have extra taxes withheld from other sources, such as your pension or wages. You can also choose to send in quarterly tax payments. This can help you avoid owing a large lump sum when you file your return.  

Keep in mind that any “windfall” income will almost certainly push you over the provisional income limits. This type of income might come from selling stocks or starting to take required minimum distributions from retirement accounts due to your age.

Frequently Asked Questions (FAQS)

What if I don't receive a Form SSA-1099?

You can get a copy online at the Social Security Administration website. It's mailed out each January, but it might be delayed or misplaced in the shuffle if you moved or otherwise changed your address. You'll have to create a Social Security account, then go to "Replacement Documents."

What if I only collected Social Security and had no other forms of income?

Your provisional income would be half of what you collected in Social Security benefits or Railroad Retirement Tier I benefits.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. “Publication 915 Social Security and Equivalent Railroad Retirement Benefits.”

  2. IRS. "Top Frequently Asked Questions for Social Security Income."

  3. Congressional Research Service. “Social Security: Taxation of Benefits,” Page 3.

  4. Social Security Administration. "Research Note #12: Taxation of Social Security Benefits."

  5. Congressional Research Service. “Social Security: Taxation of Benefits,” Page 12.

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