Pensions

Pension payments that you get from private and government pensions are 100% taxable but at ordinary income tax rates, as long as you didn’t make any after-tax contributions to the given pension plan.

Social Security

Some retirees who receive Social Security don’t have to worry about federal income tax when it comes to their benefits. However, for others, the whole matter depends on something called “provisional income”.

The latter isn’t so lucky, as they might have to pay federal income tax up to 85% of the benefits. To understand what’s your provisional income, you need to start with your income on Line 9 of Form 1040 or 1040-SR, then add tax-exempt interest and 50%  of your Social Security benefits. If your provisional income is over $34,000, up to 85% of your benefits are fully taxable.