How Much Retirement Income Can I Make Without Paying Taxes?

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Paying taxes was something you did most of your life. Now that you are getting closer to retirement, you dream of a time when taxes are no longer something you have to pay. Besides, you want to keep as much of your retirement savings and Social Security in your pocket as you can. Although it is possible to live without paying taxes in retirement, there are some things you need to think about long before you work your last day.

Taxes on interest payments and withdrawals from tax-deferred retirement accounts get added to the calculation of whether you will pay taxes or not. The Internal Revenue Service sets limits on how much you can make before requiring taxes. If you make more than those limits, you will pay taxes at 50 percent or 85 percent of your Social Security income and taxes on your other income.

When You Need to Pay Taxes on Social Security

There is never a time when you will not pay taxes on your Social Security income if you make more than the set limits. It does not matter if you have or have not reached full retirement age (usually 66–67, depending on what year you were born). Your taxes will depend on your adjusted gross income plus any nontaxable interest and one-half of your Social Security income.