Key Points
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Federal Social Security benefit tax rules have remained unchanged for three decades.
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The new senior tax deduction may reduce your tax bill through the 2028 tax year.
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Eight states tax the Social Security benefits of some of their seniors.
If you’re like many seniors, you’re happy to get your Social Security checks each month, but you wish they went further. Things were already tight before inflation started driving up costs, and there’s more than six months to go before you can even think about another benefit boost.
The last thing you want is to give up any of your hard-earned checks to taxes. There’s a rumor going around that benefit taxes are now a thing of the past, but the truth isn’t quite that simple.
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Federal Social Security benefit taxes remain the same as ever
Some believe that President Trump’s “big, beautiful bill” ended Social Security benefit taxes, but it didn’t. Benefit taxation rules have remained the same for over three decades, and there are no current plans to change them.
The government looks at your provisional income when deciding whether to tax your benefits. This is your adjusted gross income (AGI), plus any nontaxable interest from municipal bonds, and half your annual Social Security benefit. For example, if your AGI was $50,000 and you received $24,000 from Social Security this year, your provisional income would be $62,000.
The following table breaks down what percentage of your checks you could owe ordinary income taxes on based on your provisional income and marital status:
|
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.
These taxes can cost thousands of dollars, and with the limits above not indexed to inflation, an increasing number of seniors owe them.
Some could see a brief reprieve through the 2028 tax year, thanks to the new $6,000 senior deduction the “big, beautiful bill” added. This is only for those 65 and older with valid Social Security numbers.
It doesn’t change the percentage of your Social Security benefits that are taxable, but it can reduce how much you owe. This could give you some breathing room while the deduction remains in place.
Most states don’t tax Social Security benefits
You likely won’t owe your state government a portion of your Social Security benefits. These taxes have become increasingly unpopular, and only eight states still have them. They are:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
Each state sets its own rules, but many have exceptions for low- to average-income seniors. Check with an accountant in your state or your state department of taxation to find out whether you could owe state benefit taxes.
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