8. A Portion (or All) of Your Social Security Benefits

Many retirees are shocked to discover that the government taxes the very Social Security benefits they spent their lives paying into. However, depending on your overall financial picture, you can legally receive your Social Security checks completely tax-free.

The Social Security Administration (SSA) and the IRS use a specific formula called “Combined Income” (sometimes called Provisional Income) to determine if your benefits are taxable. Your Combined Income equals your Adjusted Gross Income (AGI) plus non-taxable interest (like municipal bonds) plus half of your Social Security benefit.

If your Combined Income falls below $25,000 as a single filer, or $32,000 as a married couple filing jointly, your Social Security benefits remain 100% tax-free. Here is where strategic retirement tax planning pays off: withdrawals from Roth IRAs, Roth 401(k)s, HSAs, and reverse mortgages do not count toward your Adjusted Gross Income. By funding your retirement through these tax-exempt vehicles, you can keep your Combined Income artificially low, thereby protecting your Social Security benefits from taxation entirely.