When trying to organize your finances or attempt retirement planning in general, you’re likely going to be factoring in your benefits from Social Security to help you handle some of your expenses. According to the Social Security Administration (SSA), the maximum benefit you could earn if you are ready to start claiming may vary, as it depends on the age you start collecting benefits.
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For example, if you wait until age 70, the maximum monthly benefit is $5,108, which would be the most you can earn, but if you start collecting at full retirement age, which is between 66 and 67, the maximum benefit is $4,018. If you want an early retirement, the maximum benefit for retiring at age 62 is $2,831.
Currently, the average monthly retirement benefit for Social Security recipients is about $1,999.97 for retired workers and $1,948.17 for all retirement beneficiaries. However, what does that mean when it comes to your Social Security taxes?
Receiving the Maximum Social Security Benefit
To better understand your Social Security taxes, it’s important to know the taxable wage cap for earning the maximum Social Security benefit. In 2025, to receive the maximum benefit, there are several requirements you need to fulfill.
Firstly, you need a history of consistently earning at least the annual maximum taxable wage cap of $176,100. To truly get the highest possible amount, you must also delay claiming benefits until age 70. If you do, you would get about $5,108 per month. The taxable wage cap is up from last year, as $168,600 was the salary needed to receive the maximum benefit.
The SSA takes your 35 highest-earning years and averages them (adjusted for inflation) to determine your benefit. If, via this calculation, you have paid the taxable maximum over this period, you may be eligible for the maximum benefit.
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Do You Have To Pay Taxes on Your Social Security Income?
Social Security income and taxes can be a confusing topic since your tax situation can be fairly straightforward during your working years if you receive your income from one source. When you’re working, you submit your employment income and your various other investment streams when you file your federal taxes to figure out where you stand. When you retire, your income may arrive from multiple sources with different characteristics (a pension plan, real estate holdings, etc.).
While the benefits you receive from Social Security are taxable at the federal level, your overall income will determine whether you pay taxes. According to the SSA, you’ll have to pay federal income taxes on your benefits when you have a significant amount of income in addition to your benefits. For example, if you have self-employment income, dividend income and other taxable income streams, then you may have to pay taxes since you’re likely earning over the threshold.
Every January, you should receive a Social Security Benefit Statement (Form SSA-1099) showing you the benefits you received in the prior year. You then have to disclose this Benefit Statement when you work on your federal income tax return. During this process, you’re going to find out whether your benefit will be taxed or not.
State-by-State Social Security Taxes
As of 2025, 41 states won’t tax you on your Social Security. But if you live in one of the following nine states, you will have to pay taxes on your benefits:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
Keep in mind that no matter where you live, your Social Security benefits could still be subject to federal taxes depending on factors such as income and tax filing type.
How Much Would You Pay
So, what happens to your taxes when you qualify for the maximum Social Security income of over $5,000? You’re going to be taxed accordingly when the IRS factors in your combined income. These calculations will depend on how many other income streams you have in your retirement years.
If you’re over the limit, then you’ll have to pay taxes on 85% of your benefits from Social Security. This is on top of any additional taxes that you’re going to have to pay on your other income streams, unless, of course, they are eliminated altogether.
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: Social Security Taxes: How Much You Really Get With the Maximum Benefit
