A magical time of life, retirement also comes with a dubious dose of magical thinking. Yes, you’ll write that memoir (because it will write itself). Of course you’ll drop those 20 pounds (without dropping the donuts). And those Social Security checks? They’re surely secure from the taxman once you hit 65. Or at least 70. Right?

It’s dollars to donuts that your memoir, once you finally pick up a pen, should include a sad story of just how wrong you are.

Don't miss

• Social Security isn’t enough: start collecting monthly retirement rent checks by becoming the landlord of Walmart, Whole Foods and Kroger — and you can do it without lifting a finger

• Nervous about November? Use these 3 ‘shockproof assets’ to protect your retirement nest egg in 2025 — no matter who takes the White Houses

• Protect your retirement savings with these 5 essential money moves — most of which you can complete in just minutes

Yes, Social Security recipients pay taxes — which may seem odd and redundant given all that money taken from your paychecks over the decades. Right now, those deductions equal 6.2% for full-time employees and 12.4% for the self-employed.

It makes sense that anyone with a long history of forking over payroll taxes would anticipate a day when your Social Security becomes a tax-free benefit. But other factors contribute to the confusion many retirees experience as they await a time that never arrives.

How Social Security taxation works

While Social Security and retirement accounts work in tandem to ensure a sound retirement, the fact is that they’re apples and oranges financially. That doesn’t stop people from potentially confusing events such as the required minimum distribution (RMD) age — when you must start tapping your accounts, currently 73 — with some imaginary point when Social Security payouts may no longer be taxed. Or just being stunned that these government benefits are taxed at all.

So here’s the straight facts, straight from the Social Security Administration: “You must pay taxes on up to 85% of your Social Security benefits.”

Got that? Age doesn’t matter. You pay up no matter how old or young you are. In fact, 10 states tax Social Security to various degrees: Colorado, Connecticut, Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia.

There are exceptions on the federal level, but they only apply to those living on a minimal combined income, which includes your adjusted gross income, tax-exempt interest income and half of your Social Security benefits. It must total less than $25,000 (individuals) or $32,000 (married couples).

Generally speaking, those who live on Social Security alone won’t pay taxes, as it’s impossible to pass those thresholds. For 2024 retirees, the maximum monthly benefits ranged from $2,710 (age 62) to $4,873 (age 70).

Read more: Why people who work with a financial advisor retire with an extra $1.3 million

Three ways to beat Social Security taxes

Dreaming of a day the IRS will change its mind about taxing your Social Security is not so much magical as delusional thinking. But there are some strategies to expand your benefit and/or reduce your tax burden.

Reduce your gross adjusted income. It’s possible to get below those $25,000 and $32,000 thresholds if you’re creative — legally, of course — in how you approach deductions. If you receive income from a business, now’s the time to increase the number and amount of deductions you take. It’s best to consult an experienced accountant or CPA who knows how to take an aggressive approach while adhering to IRS rules. With your retirement accounts, see if you can minimize your withdrawals, as that money will count as income, too.

Leverage tax-deferred income. This won’t eliminate your Social Security taxes, but it will certainly delay when you have to pay them. Annuities, for example, will not show up on your reportable income. There’s also an obscure IRS document, Form W-4V, that allows you to defer taxes on your Social Security payments. These withholding amounts are available in tiers of 7%, 10%, 12% or 22% from each check. Again, consult a tax professional before you apply these strategies.

Keep reviewing and adjusting your tax strategy. Life doesn’t stop happening just because you’ve retired. All kinds of events can result in changes to your tax circumstances — for example, when you’re expected to start making RMDs, they may push you into a new income bracket. It’s important to check in periodically with your strategy and make adjustments if needed.

What to read next

• More than 25% of aging Americans don’t ever expect to retire — turbocharge your nest egg in 3 minutes by investing your spare change automatically

• Suze Orman: If you think you're ready to retire, think again — 3 critical money moves to avoid a financial crisis in retirement

• I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 3 of the easiest ways you can catch up (and fast)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.