IRS Notice 703 – As tax season approaches in 2026, many retirees and Social Security recipients wonder about the tax implications of their benefits. IRS Notice 703, officially titled “Read This To See If Your Social Security Benefits May Be Taxable,” serves as a crucial tool for determining whether a portion of your Social Security income might be subject to federal income tax. This notice, revised in November 2025, includes a simple worksheet to help you calculate potential taxability based on your total income for the 2025 tax year.
In this comprehensive guide, we’ll break down what IRS Notice 703 is, how Social Security benefits are taxed, who should use the worksheet, and step-by-step instructions for completing it. Whether you’re filing singly or jointly, understanding these rules can help you avoid surprises when preparing your 2025 tax return.
What Is IRS Notice 703?
IRS Notice 703 is a one-page worksheet provided by the Internal Revenue Service (IRS) to assist taxpayers in figuring out if their Social Security benefits (including retirement, survivor, and disability benefits) or Supplemental Security Income (SSI) are taxable. It’s typically mailed along with Form SSA-1099, which reports your total Social Security benefits for the year.
The notice emphasizes that if Social Security or SSI is your only income source, you likely won’t need to file a federal tax return. However, if you have additional income from sources like pensions, wages, or investments, a portion of your benefits—up to 85%—could become taxable. This worksheet is not filed with your taxes; it’s a preliminary calculation tool to guide what you report on Form 1040 or 1040-SR.
For the 2025 tax year (filed in 2026), the rules remain consistent with prior years, as no major legislative changes have adjusted the income thresholds for Social Security taxation. Always refer to the latest IRS Publication 915 for detailed rules on Social Security and equivalent railroad retirement benefits.
How Are Social Security Benefits Taxed?
Social Security benefits aren’t automatically taxable for everyone. The IRS uses a formula that combines half of your Social Security benefits with your other income (including tax-exempt interest) to determine if taxes apply. This combined amount is often called your “provisional income.”
- No Tax: If your provisional income falls below certain thresholds, none of your benefits are taxable.
- Up to 50% Taxable: If it exceeds the base threshold but is below a higher limit, up to 50% of your benefits may be taxed.
- Up to 85% Taxable: Above the higher limit, up to 85% could be taxable.
The base thresholds for the 2025 tax year are:
- $25,000 for single filers, heads of household, or qualifying surviving spouses.
- $32,000 for married couples filing jointly.
- $25,000 for married filing separately if you lived apart from your spouse all year; otherwise, $0.
These thresholds have not been adjusted for inflation since they were established, meaning more recipients may find their benefits taxable as incomes rise over time. Railroad retirement tier I benefits follow similar rules.
Who Needs to Use IRS Notice 703?
You should use the Notice 703 worksheet if:
- You received Form SSA-1099 for Social Security benefits in 2025.
- You have other sources of income, such as interest, dividends, or wages.
- You’re unsure if your benefits are taxable and want a quick check before consulting IRS Publication 915.
Do not use this worksheet if:
- You received Form RRB-1099 (railroad benefits), Form SSA-1042S (nonresident alien benefits), or Form RRB-1042S.
- You’re excluding certain income types like foreign-source income, U.S. savings bond interest from education expenses, or employer adoption benefits.
In these cases, refer directly to IRS Publication 915 for more complex calculations.
Step-by-Step Guide to the IRS Notice 703 Worksheet
The worksheet in Notice 703 is straightforward. Here’s how to complete it for the 2025 tax year:
- Line A: Enter the total from box 5 of all your 2025 Forms SSA-1099. This includes the full amount of any lump-sum payments for 2025 or prior years.
- Line B: Multiply Line A by 0.50 (50%).
- Line C: Add your other taxable income, excluding Social Security. This includes pensions, wages, interest, ordinary dividends, and capital gain distributions (before any deductions).
- Line D: Enter any tax-exempt interest, such as from municipal bonds.
- Line E: Add Lines B, C, and D.
Now, compare Line E to the thresholds:
- Single, Head of Household, or Qualifying Surviving Spouse: If > $25,000, part may be taxable.
- Married Filing Jointly: If > $32,000, part may be taxable.
- Married Filing Separately: If > $0 (or > $25,000 if lived apart all year), part may be taxable.
If Line E exceeds these amounts, use IRS Publication 915 or tax software to calculate the exact taxable portion. Report the total benefits on Form 1040 line 6a and the taxable amount on line 6b. If none are taxable but you must file a return, enter -0- on line 6b.
Example Calculation
Suppose you’re single with $20,000 in Social Security benefits (Line A) and $15,000 in pension income (Line C), plus $1,000 in tax-exempt interest (Line D):
- Line B: $20,000 × 0.50 = $10,000
- Line E: $10,000 + $15,000 + $1,000 = $26,000
- Since $26,000 > $25,000, part of your benefits may be taxable. Consult Pub. 915 for the precise amount.
For lump-sum payments from prior years, you may elect a special calculation in Pub. 915 to potentially reduce your tax liability.
Recent Updates and Considerations for 2026 Filing
As of February 2026, there are no significant changes to the Social Security taxation rules from the One, Big, Beautiful Bill or other legislation affecting the 2025 thresholds. However, inflation adjustments impact other areas like standard deductions ($15,750 for singles in 2025) and Social Security wage bases ($184,500 for 2026).
Seniors aged 65+ may qualify for an additional $6,000 deduction under new provisions effective through 2028, but this doesn’t directly alter Social Security taxability. Always check the IRS website for the most current forms and publications.
FAQs About Taxable Social Security Benefits
Do I have to pay taxes on 100% of my Social Security?
No—taxes apply to up to 85% based on your provisional income.
What if I received a lump-sum payment?
Include the full amount on Line A, but see Pub. 915 for prior-year adjustments.
Are SSI benefits taxable?
SSI is generally not taxable, but use the worksheet to confirm.
Where can I download IRS Notice 703?
Access it directly from the IRS website: https://www.irs.gov/pub/irs-pdf/n703.pdf.
Conclusion: Stay Informed and Prepared
IRS Notice 703 provides an essential first step in assessing if your Social Security benefits are taxable for the 2025 tax year. By calculating your provisional income early, you can better plan for any tax obligations. For personalized advice, consult a tax professional or use IRS resources like Publication 915. Filing accurately ensures you comply with federal rules while maximizing your benefits. Remember, tax laws can evolve, so verify with official IRS sources before submitting your return.