Key Points
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You could owe Social Security taxes on up to 85% of your benefits, depending on your income and marital status.
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The “big, beautiful bill” didn’t eliminate Social Security benefit taxes.
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It did institute a new senior tax deduction, which could help you save some money if you meet certain criteria.
No matter what side of the political aisle you fall on, you may have been rooting for President Donald Trump to make good on his promise to end Social Security benefit taxes so you could hold on to more of your hard-earned cash. He claims to have done so with the passage of the “big, beautiful bill” last month, but the law itself tells a different story.
You may experience a tax break this year thanks to the new law, if you meet certain criteria. But Social Security benefit tax laws are still going strong. Understanding how they work is critical if you hope to avoid surprises at tax time next year.
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How Social Security benefit taxes work
Social Security benefit taxes went into effect in the mid-1980s, and they’ve remained unchanged ever since. Not everyone owes them, even today. It depends on your provisional income; this is your adjusted gross income (AGI), plus any nontaxable interest you have from municipal bonds, and half your annual Social Security benefit. So if you have an AGI of $50,000 (but no nontaxable bond interest) and receive $24,000 in Social Security benefits annually, your provisional income would be $62,000.
The government taxes up to a certain percentage of your benefit depending on your provisional income and marital status, as outlined in the table below:
|
Marital Status |
0% of Benefits Taxable If Provisional Income Is Below: |
Up to 50% of Benefits Taxable If Provisional Income Is Between: |
Up to 85% of Benefits Taxable If Provisional Income Exceeds: |
|---|---|---|---|
|
Single |
$25,000 |
$25,000 and $34,000 |
$34,000 |
|
Married |
$32,000 |
$32,000 and $44,000 |
$44,000 |
Data source: Social Security Administration.
This doesn’t mean you can lose up to 85% of your checks, though. The table just indicates what percentage of your benefits you could pay ordinary income taxes on. Income tax brackets range from 10% to 37%, with most people falling toward the lower end of that scale.
Still, the thresholds above are pretty low, and with average senior households spending over $60,000 per year, it’s not difficult to wind up in that 85% group. As inflation drives up average costs, these taxes will only become more common.
Nothing in the new megabill altered how these benefit taxes work, so you’re not off the hook for them in 2025. But it did make one change that could lessen your tax liability if you meet the necessary criteria.
What the Trump megabill actually changed for seniors
The “big, beautiful bill” added a new senior tax deduction for those 65 and older, whether they’re on Social Security or not. A tax deduction reduces your taxable income for the year; it’s basically money the government doesn’t tax you on.
The full deduction is worth $6,000 for a single adult or $12,000 for a married couple. You must have income at or below $75,000 for a single adult or $150,000 for a married couple to claim the full credit. After this, you lose $60 for every $1,000 your income is over the applicable limit, until it phases out entirely at $150,000 if you’re single and $250,000 if married.
The tax savings from this plan are a far cry from what they would have been by eliminating benefit taxes altogether, but they’re still substantial. It’s estimated that the average senior who qualifies for this credit will see $670 more in income after taxes due to this new deduction, and some will see more.
If you’d like to get an idea of how it will affect your taxes specifically, it’s best to consult an accountant who can give you personalized advice. Otherwise, if you qualify for the deduction, you can probably expect a modest tax savings this year compared to what you would’ve gotten under the old law.
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