Is Social Security taxed abroad? For a US citizen, the IRS keeps its claim almost everywhere, and the new country may add a second one. The average retired worker’s check was $2,086 a month in July 2026, about $25,000 a year. Take it to Mexico and only the US can tax it. Take it to Spain and Spain taxes it as your income. Take it to Costa Rica or Panama and the local tax office leaves it alone.
Same check. Three answers.
What decides it is one paragraph in a tax treaty, somewhere between Article 17 and Article 21, and really one verb in that paragraph. Below are the five countries Americans ask about most, the US rule that runs underneath all of them, and how to read the paragraph for any other country in an evening. I’m not a tax adviser. This is the map you bring to one.
Is Social Security taxed abroad? The answer by country
| Where you live | Can the new country tax it? | Can the US tax it? | Where it’s written |
|---|---|---|---|
| Mexico | No | Yes, under normal US rules | US–Mexico treaty, Art. 19(1)(b) |
| Spain | Yes, as a resident’s income | Yes. Spain credits US tax that isn’t based only on citizenship | US–Spain treaty, Art. 20; Spanish tax agency |
| Portugal | Yes, as a resident’s income | Yes: “may be taxed,” not “only” | US–Portugal treaty, Art. 20(1)(b); relief in Art. 25 |
| Costa Rica | No. It taxes only Costa Rican-source income | Yes | No US income tax treaty |
| Panama | No. It taxes only Panamanian-source income | Yes | No US income tax treaty |
| Canada, Egypt, Germany, Ireland, Israel, Italy, Romania, UK | Depends on the treaty | No, for US citizens who live there (Italy: only if you’re Italian too) | IRS Publication 915 |
Two phrases do most of the work. “Taxable only in” hands the benefit to one country outright. “May be taxed in” lets the paying country tax it without shutting the other one out. Mexico’s treaty says “only.” Spain’s and Portugal’s say “may.” That one word is the whole difference.
The US side doesn’t move
The US taxes its citizens on worldwide income wherever they live, so the IRS side looks exactly the way it did at home. IRS Publication 915 has the test. Take half your benefits and add all your other income, tax-exempt interest included.
- Under $25,000 single, or $32,000 married filing jointly: none of the benefit is taxable.
- Above that: up to 50% of it can be.
- Above $34,000 single, or $44,000 joint: up to 85%.
Run the average check through it. $2,086 a month is $25,032 a year, and half of that is $12,516. With no other income, a single retiree owes the IRS nothing on the benefit. A couple with two average checks, $50,064 a year, owes nothing either, because half is $25,032 and the joint line is $32,000. Add a $20,000 IRA withdrawal to the single retiree, though, and the total becomes $32,516. Now part of the benefit is taxable.
Two details catch people who live abroad.
The foreign earned income exclusion doesn’t shrink “other income” in this test. If you still work remotely and exclude your salary on Form 2555, that salary can still push your benefit into the taxable zone. The publication says so plainly.
And the SSA won’t withhold US tax from a citizen’s benefit. Nothing comes out of the check. The bill shows up when you file, so if you’ll owe, make estimated payments.
The same publication names eight countries where a US citizen who lives there is exempt from US tax on the benefit: Canada, Egypt, Germany, Ireland, Israel, Italy (if you’re an Italian citizen too), Romania and the United Kingdom. That list is the saving clause at work. Nearly every US treaty has one, a paragraph that lets the US tax its own citizens as if the treaty didn’t exist, followed by a list of exceptions. When the Social Security paragraph is on that exception list, the treaty protects you from US tax. For those eight countries, it is. For the five on this page, it isn’t.
Read that twice.
Spain: taxed as your income, and the credit depends on why the US taxed it
I live in Spain, so this is the paragraph I’ve read most. Spain’s tax agency spells it out: under Article 20 of the treaty, US Social Security and US private pensions are, in general, taxed in Spain. The US may also tax Social Security paid to a Spanish resident or a US citizen. When it does, you can claim Spain’s deduction for international double taxation, but only for US tax charged on grounds other than your citizenship. Where the US taxes you purely because you’re American, the agency says it’s up to the US to relieve the double tax.
In plain terms, the average check, about €21,960 a year ($25,032), goes on your Spanish return with the rest of your income. It’s taxed on Spain’s progressive scale, where the lowest combined band is about 18–19% depending on the region. If the IRS takes nothing because you’re under its threshold, the Spanish bill is the only one.
US government pensions work differently. Federal civil service and military pensions fall under Article 21.2 and are generally taxed only in the US. Spain still counts them when it sets the rate on your other income. If you’re a Spanish national, it flips, and only Spain taxes them.
You’re a Spanish tax resident if you spend more than 183 days there in a calendar year, and short trips away still count as days in Spain unless you prove tax residence somewhere else. The rest of the Spanish picture, including the Modelo 720 asset report and the wealth tax, is on Spain taxes for Americans.
Portugal: the same “may,” and the old retiree deal is closed
Portugal’s treaty uses Spain’s wording. Article 20(1)(b) says US Social Security may be taxed in the US, which isn’t exclusive, so Portugal taxes it as your income once you’re resident there. Article 25 handles the relief for double taxation.
Residence in Portugal means more than 183 days in any 12-month period, consecutive or not. You can also be resident with fewer days if you keep a home that shows you mean to live in it. Count in rolling windows, not calendar years.
The part most online advice still gets wrong is the NHR, the non-habitual resident regime that retirees used to move for. For anyone who joined from 2020, pensions under it were taxed at a flat 10%, not zero. Then the 2024 state budget revoked the regime from January 1, 2024. It’s gone. People already in it keep it until their 10 years run out, and the last transition applications closed on March 31, 2025. Its replacement, known as IFICI, is for researchers, qualified professionals and startup staff. A retiree living on a pension doesn’t qualify.
Moving now? Assume Portugal’s normal progressive rates, and have a Portuguese adviser run your actual numbers.
Mexico: the treaty gives it to the US
Mexico had 36,095 retired workers collecting US benefits at the end of 2025, according to the SSA’s annual supplement. That’s more than Portugal (12,185) and Spain (9,740) combined, so this is the answer that matters to the most people.
Mexico taxes its residents on worldwide income, which is why people assume their benefit is caught. It isn’t. Article 19(1)(b) of the US–Mexico treaty says Social Security paid to a resident of Mexico or a US citizen is taxable only in the country paying it. For US Social Security, that’s the US. Only the US.
So a single retiree in Mérida living on the average check pays no income tax on it in either country. The IRS threshold isn’t reached, and Mexico can’t touch it.
Other income plays by other rules. IRA and 401(k) withdrawals sit in a different part of the same article, and the saving clause keeps the US’s right to tax its citizens on them. If your income is a mix, you want a preparer who has done both countries’ returns.
Mexico’s residence test has no day count at all. You’re resident if you set up your home there. Have homes in both countries? Then it turns on where the center of your life is, and the law’s example is whether more than 50% of your income for the year comes from Mexican sources.
Costa Rica and Panama: territorial, for now
Neither country has a US income tax treaty, and for Social Security neither needs one. Both tax only income earned locally. Costa Rica doesn’t tax a US Social Security payment or a foreign pension paid in from abroad, whatever your residency status and however many days you spend there. Panama’s tax authority describes its income tax as covering activities carried out in Panamanian territory, regardless of the nationality or residence of the person earning it.
The downside is the direction Costa Rica is heading. Two bills entered its Legislative Assembly in August 2026, Expediente 25.796 and 25.734, that would tax some foreign passive income: dividends, interest, rental income, capital gains. A broader Treasury proposal is on the table too. Whether any of it would ever reach pensions isn’t settled, and none of it has passed. If Costa Rica is on your list, check the status the month you decide. Not the year before.
On the US side, both countries work like home. You file your 1040, and Publication 915’s thresholds decide whether any of the benefit is taxable.
Three beliefs that cost people money
“A totalization agreement means I won’t be taxed twice.” A totalization agreement coordinates Social Security contributions and work credits for people who worked in two countries. It doesn’t decide who taxes your benefit as income. That’s the tax treaty, a separate document. Mexico isn’t on the SSA’s list of totalization countries, and that has nothing to do with why Mexico can’t tax your check.
“Stay under 183 days and I’m not a resident.” Spain can treat you as resident without the days if your main economic base is there, and it presumes you’re resident if your spouse and minor children live there. Portugal counts a home you clearly intend to live in. Mexico doesn’t count days at all.
“The treaty keeps the US away from my benefit.” For a citizen, only if the saving clause says so. Japan’s treaty says pensions, Social Security included, are taxable only where you live. The US still taxes its citizens there, because that paragraph isn’t on the saving clause’s list of exceptions.
Check any country in an evening
- Open the IRS’s A-to-Z list of US income tax treaties. Country not listed? No treaty. Skip to step 5.
- Open the treaty and every protocol after it, then search for “social security.” Protocols rewrite articles. The IRS page for Italy shows the 1984 treaty first, but the one that applies is the 1999 treaty, in force since January 1, 2010.
- Read the verb. “Taxable only in the first-mentioned State” means the country paying the benefit. “Taxable only in that other State” means where you live. “May be taxed” means shared. “Exempt from tax in both” is rare; Israel’s treaty is the example.
- Find the saving clause, usually in Article 1, and see whether the Social Security paragraph is on its exception list. Cross-check with Publication 915’s eight countries.
- Look up the residence rule on the local tax authority’s own site.
- Take all of it to a cross-border preparer before you sign a lease.
What I’d pay for before moving
One hour with a preparer who does US expat returns and one with a local adviser, both before you move. Several choices only have good answers in advance: the date your residence starts, which tax year you move in, what you take out of an IRA the year before you go. After the move, an adviser can tell you what happened. Before it, they can still change it. I don’t have an arrangement with any tax preparer, adviser or firm.
Where your benefit lands is its own question, and it’s on US bank accounts when you move abroad. For the wider tax picture, from FBARs to state residence, start at taxes when you retire abroad.