How does the income level affect the taxation of Social Security benefits for Married Filers?

The taxation of Social Security benefits for married filers is determined by their combined income level, which includes adjusted gross income (AGI), tax-exempt interest, and half of their Social Security benefits. As the income level increases, a larger portion of Social Security benefits becomes subject to taxation.

Married filers whose combined income exceeds certain thresholds will see a progressive increase in the taxable percentage of their Social Security benefits. Specifically, if their combined income is above $32,000, up to 50% of their benefits may be taxable. If their combined income exceeds $44,000, up to 85% of their Social Security benefits may be subject to federal income tax. This structure means that the higher the couple's income, the more of their Social Security benefits will ultimately be taxed, leading to an increase in tax liability as their income rises.

Thus, this progressive taxation structure makes the correct choice clear, as it accurately describes the relationship between income level and the tax treatment of Social Security benefits for married filers.