While Social Security benefits are meant to provide a financial safety net in retirement, they are not always tax-free. Understanding whether you’ll owe taxes on your benefits is an important part of planning and budgeting for retirement.
The One Big Beautiful Bill Act introduced a significant $6,000 “senior bonus” deduction, which may reduce the combined income used to determine how much of your Social Security is taxable.
To determine if your Social Security benefits are subject to taxes, start by calculating your total annual income in retirement. If you receive money from different sources, such as retirement account withdrawals or a part-time job, you may owe taxes on a portion of your Social Security benefits. The federal government taxes up to 85% of Social Security payments for retirees who earn above a certain threshold.
[Read: What Is the Maximum Possible Social Security Benefit in 2026?]
Does Trump’s OBBB Act Eliminate Taxes on Social Security?
While the OBBB Act does not eliminate taxes on Social Security benefits, it does introduce a senior deduction to offset the cost.
Beginning in 2026, the law provides a $6,000 senior bonus deduction. This additional deduction is intended to lower a retiree’s taxable income, which may then lower the amount of their Social Security subject to tax. However, it does not change the income thresholds that determine when benefits become taxable. Instead, the new senior deduction may help offset some of the tax burden for eligible retirees by lowering the combined income used in the calculation.
What Is the 2026 Social Security COLA?
Benefit increases can also affect whether your Social Security becomes taxable.
The Social Security cost-of-living adjustment for 2026 is 2.8%, resulting in an average Social Security monthly check of $2,071. If Social Security is your sole source of income in retirement, you can expect to keep the full amount.
“A retiree with only Social Security income will pay no taxes on their benefits because Social Security by itself is not taxable,” said David Globke, president of LatWealth Financial Advisors in Clearwater, Florida, in an email.
[READ: What Is the Social Security COLA for 2027?]
When Is My Social Security Income Taxable?
If you earn income beyond Social Security and want to determine if your benefits are taxable, add your adjusted gross income, your nontaxable interest and half your Social Security benefit. If the amount is more than $25,000 as an individual or $32,000 as a married couple, you must pay federal income taxes on part of your Social Security income.
For retirees who rely solely on Social Security, benefits are often not taxable. However, that can change if they begin drawing income from other sources.
“If that same retiree starts taking distributions from an IRA and receiving income from a small pension in addition to their Social Security benefits, their previously tax-free Social Security benefits could potentially be taxed,” Globke said. That’s because the additional income increases their combined income, which may push them above the threshold where benefits become taxable.
How to Calculate Your Social Security Tax Rate
When it comes to Social Security benefits, “there are three possible tax percentages: 0%, 50% or 85%,” said Lamar Brabham, CEO and founder of Noel Taylor Agency in North Myrtle Beach, South Carolina, in an email. Which rate applies depends on your combined income and filing status. If your combined income of less than $25,000 as an individual or $32,000 as a married couple filing jointly, your Social Security benefits are not subject to federal income tax.
If you earn more, the breakdown is as follows:
— Individuals with a combined income between $25,000 and $34,000 may be taxed on 50% of their Social Security benefits.
— If your combined income as an individual exceeds $34,000, 85% of your Social Security benefits may be taxable.
— Married couples with a combined income between $32,000 and $44,000 may be taxed on 50% of their Social Security benefits.
— Married couples with a combined income that exceeds $44,000 may be taxed on 85% of their Social Security benefits.
| Filing status | 0% tax (combined income) | 50% tax (combined income) | 85% tax (combined income) |
| Individual | Under $25,000 | $25,000 — $34,000 | Over $34,000 |
| Married joint | Under $32,000 | $32,200 — $44,000 | Over $44,000 |
Once you start receiving Social Security, you’ll receive a Social Security benefit statement called the Form SSA-1099 every January. This report lists the benefits you received during the past year. You can use this document to find the total amount of your annual Social Security payments and calculate whether your benefit will be subject to tax. You can also find this form in your My Social Security account.
[READ: How Trump’s Mass Deportations Could Lower the Social Security Trust Funds]
How to Withhold Federal Taxes From Your Social Security Benefit
If you know you’ll owe Social Security taxes, you can choose to make quarterly estimated tax payments to the IRS. You might also opt to have federal taxes withheld from your benefit. To do this, you’ll fill out IRS Form W-4V. Take your completed form to your local Social Security office or send it back by mail or fax. Taking these steps can make it easier to budget and avoid missed payments.
Your State Taxes Can Impact Social Security Income
In addition to federal taxes, retirees should also consider how state and local taxes can affect their Social Security income.
“It’s important for retirees to consider local and state taxes, as these vary widely and can significantly impact overall tax burdens,” said Zachary Hellman, a federally licensed enrolled agent and founder of Los Angeles-based Hellman & Associates and Tax Prep Tech, in an email. “States with no income tax or favorable treatment of retirement income can offer advantages, while others with higher taxes might pose a greater burden.”
States that tax Social Security income include Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia. In some cases, lower-income seniors may not be subject to Social Security taxes.
How to Minimize Your Social Security Taxes
Fortunately, retirees have some strategies to help reduce the taxes they owe on Social Security benefits.
“Given that you have some control over your tax-exempt income and your adjusted gross income, you may be able to reduce taxes on Social Security and possibly eliminate them completely,” Brabham said.
One often-used strategy is to convert qualified money such as IRAs, 401(k)s or 403(b)s to Roth accounts. When this is done, any distributions or withdrawals you take are tax-free and not included in your combined income calculations.
“This method of mitigating taxes on Social Security can be particularly impactful once you reach the required minimum distribution age,” Brabham said. “This is when you are forced to withdraw a certain percentage of your qualified accounts.” When that occurs, it will often cause your combined income to increase, which could lead to taxes on your Social Security benefit.
If you choose to work during retirement, it’s important to analyze how your earnings will affect your combined income. If your income pushes you over the thresholds for Social Security taxation, you’ll need to weigh whether the benefits of working outweigh the potential tax costs. You may feel that the benefits of working and staying active outweigh the tax costs, or you may try to keep your earnings under a certain threshold to reduce your tax burden.
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When You Need to Pay Taxes on Social Security originally appeared on usnews.com
Update 03/06/26: This story was published at an earlier date and has been updated with new information.