I’m expecting $786 a month from Social Security and have heard 85% of that will be taxed. Is that right?

Many people spend years working, earning money, and paying taxes on that money. And one benefit you’re supposed to get after all of those years is the promise of Social Security in retirement.

But come retirement, many seniors end up shocked when they find out that their Social Security benefits are taxable. And this Reddit poster is looking to avoid that shock by asking what to expect as far as taxes on benefits are concerned.

The situation

In this post, we have someone who is planning for their upcoming retirement. For 2026, the average Social Security benefit for retired workers has climbed to $2,013 per month due to the 2.8% COLA increase. While this poster is expecting a smaller check of $786, they are rightly concerned about having 85% of those benefits taxed. That 85% isn’t a random number; it represents the maximum portion of your benefit that the IRS can consider taxable income based on your “combined income.”

What is combined income?

Combined income is a formula used to determine who pays taxes on Social Security benefits. It’s calculated as follows: adjusted gross income + 50% of your annual Social Security income + nontaxable income you receive during the year.

If your combined income falls between $25,000 and $34,000, and you’re single, you can expect to be taxed on up to 50% of your Social Security benefits. If your combined income is more than $34,000 and you’re single, you could be taxed on up to 85% of your Social Security benefits. These thresholds increase for married couples, with the 85% bracket triggering beyond $44,000. It is important to note that for the 2026 tax year, the Social Security wage base has risen to $184,500, which may affect those still working while collecting benefits.

If these thresholds sound really low, it’s because they are. The limits for combined income were established decades ago and have not been updated for inflation. As a result, rising benefit amounts from annual COLAs are pushing a record number of seniors over these static thresholds. Furthermore, while federal rules are strict, state-level taxes are vanishing; as of 2026, only eight states still tax Social Security benefits, with many like Minnesota significantly expanding exemptions.

The New Legislative Landscape

The last thing you want in retirement is to be caught off guard by a tax bill. While there is persistent political talk about a total repeal of Social Security taxes, the current legislative focus has shifted following the passage of the One Big Beautiful Bill Act. This legislation introduced “Trump Accounts,” which allow for new tax-advantaged savings, but it did not eliminate the existing tax brackets for Social Security benefits. Looking ahead, early estimates for 2027 project a 3.9% COLA, meaning retirees must continue to factor these tax thresholds into their long-term budgets to avoid a “tax torpedo” as their monthly checks grow.

Editor’s Note: This 2026 update integrates the official 2.8% COLA data, introduces the impact of the One Big Beautiful Bill Act regarding “Trump Accounts,” adds a new section on the trend of vanishing state-level Social Security taxes, and provides 2027 projections to ensure the content remains forward-looking for current retirees.