Social Security is one of the more important social programs the U.S. offers. Since retirement benefits began in 1940, Social Security has helped keep hundreds of millions of people out of poverty, including many of the 52 million who currently receive benefits.
Unfortunately, like other types of income, your Social Security benefits can be taxed — for now. President Donald Trump has noted several times that he wants to eliminate the federal tax on Social Security. When and if this happens remains to be seen, but in the meantime, here’s what Social Security recipients should know about Social Security taxes.
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How federal Social Security taxes work
Federal Social Security taxes revolve around your “combined income,” which includes the following:
- Adjusted gross income (AGI): All your non-Social Security income.
- Nontaxable interest: Interest income exempt from federal taxes, such as U.S. Treasury bonds or municipal bonds.
- Half of your Social Security benefits: 50% of your total Social Security benefits for the current year.
For example, if your AGI is $20,000, you have $500 in nontaxable interest, and your annual Social Security benefits total $20,000, your combined income would be $30,500 ($20,000 + $500 + $10,000).
Once the IRS calculates your combined income, Social Security uses the following ranges to decide how much of your benefits are eligible to be taxed.
| Percentage of Taxable Benefits Added to Income | Filing Single | Married, Filing Jointly |
|---|---|---|
| 0% | Less than $25,000 | Less than $32,000 |
| Up to 50% | $25,000 to $34,000 | $32,000 to $44,000 |
| Up to 85% | More than $34,000 | More than $44,000 |
Data source: IRS.
The percentages in the above table aren’t how much your benefits will be taxed. They show how much is eligible to be added to your other income and then taxed at your regular income tax rate. For example, someone filing as single with a combined income of $30,500 could have up to 50% of their Social Security benefits taxable.
Most states don’t currently tax Social Security benefits
Even if Trump is able to eliminate federal taxes on Social Security benefits, that won’t prevent recipients from dealing with state taxes on benefits.
The good news is that most Social Security recipients won’t pay any state income tax on their benefits, because 41 states and Washington, D.C. have eliminated their tax. The not-so-good news is that it leaves nine states that do have some sort of Social Security income tax:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
The silver lining is that states have been progressively ending their taxes on Social Security benefits. Within the last couple of years, states like Kansas, Missouri, and Nebraska have eliminated their tax.
There are also states like West Virginia that have put plans in place to eliminate their tax for individuals making under $50,000 and joint filers making under $100,000. For the 2024 tax year, 35% of Social Security benefits were exempt from the tax; for the 2025 tax year, 65% of benefits are exempt; and beginning in tax year 2026, all Social Security benefits will be exempt.
Whether the federal tax is eliminated remains to be seen
President Trump reiterated his plan to eliminate the federal Social Security tax during a joint address to Congress in March. He said that the move would provide more financial relief for retirees, and stimulate the economy with the extra money retirees have.
However, it’s worth noting that the president alone can’t make this move happen. He needs approval from Congress, which requires a majority vote from both the House of Representatives and the Senate.
Eliminating the federal Social Security tax sounds like a good plan in theory, but some wonder where the lost revenue will come from to fund the Social Security Trust Fund, which pays benefits.
How this plays out remains to be seen. In the meantime, the best thing retirees can do is understand whether they need to pay federal Social Security taxes, and know their respective state’s tax rules.
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