Find out what portion of your Social Security benefits is taxable (0%, up to 50%, or up to 85%) based on your other income — the "tax torpedo" retirees need to watch. ✓ IRS formula
Taxable benefits • Provisional income
Up to 85% of Social Security benefits can be taxable, depending on your provisional income (also called combined income): your other taxable income, plus tax-exempt interest, plus half your benefits. For single filers, none is taxed below $25,000; up to 50% applies from $25,000–$34,000; up to 85% above $34,000. For joint filers the thresholds are $32,000 and $44,000.
Because these thresholds aren't inflation-adjusted, more retirees hit the "tax torpedo" each year — where each extra dollar of income makes more of your benefits taxable, spiking your effective tax rate. Roth conversions and QCDs can help manage it. Estimate only; not tax advice.
FICA funds Social Security and Medicare, and the two halves behave quite differently. Social Security is charged at 6.2% on wages only up to an annual cap — $184,500 in 2026 — above which it stops entirely, making it regressive at high incomes. Medicare is 1.45% with no ceiling at all, plus an Additional Medicare Tax of 0.9% on wages above $200,000 single or $250,000 joint. Employers match the basic rates but not the additional 0.9%. The self-employed pay both halves as self-employment tax, though they compute it on 92.35% of net earnings and deduct half of the result, which roughly equalises the burden.
Social Security = min(wages, $184,500) × 6.2%Medicare = wages × 1.45% (+0.9% above $200,000 single)Self-employed: SE base = net earnings × 92.35%, then × 15.3%where:
Assumptions: The wage base applies per employer, so someone with two jobs can over-pay Social Security and must reclaim the excess on their return. Investment income is not subject to FICA, though NIIT may apply instead.
A sole proprietor with $90,000 of net business profit, showing why the 15.3% headline overstates it.
Result$12,716.60 self-employment tax — $6,358.30 deductible
An employee earning the same $90,000 pays $6,885 in FICA and their employer pays the other half invisibly. The self-employed see the whole cost, which is why quarterly estimated payments feel so much heavier than payroll withholding for identical income.
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