Tax laws can change, and proposals to reduce or eliminate taxes on Social Security benefits often make headlines. If you're wondering what to expect next year, here are answers to some of the most common questions.
Will Social Security benefits become tax-free next year?
No. Under current law, the federal rules for taxing Social Security benefits remain in effect.
Although lawmakers have proposed eliminating these taxes, Congress instead approved a temporary senior tax deduction through the One Big Beautiful Bill Act (OBBBA). The deduction may reduce your overall taxable income if you're eligible, but it doesn't eliminate the federal tax rules that apply to Social Security benefits.
How can I tell if my benefits will be taxed?
The IRS looks at your combined income, which includes:
- Your adjusted gross income (AGI)
- Any tax-exempt interest
- Half of your annual Social Security benefits
Income Thresholds for Most Taxpayers:
Single Filers
Below $25,000: Generally not federally taxable.
Married (Jointly)
Below $32,000: Generally not federally taxable.
If your combined income exceeds those thresholds, up to 50% or up to 85% of your Social Security benefits may be included in your taxable income, depending on your income level.
Remember: "Up to 85% taxable" means up to 85% of your benefits can be included in your taxable income—not that you'll pay an 85% tax rate.
How does the temporary senior deduction help?
If you're 65 or older, you may qualify for a temporary deduction of:
- Up to $6,000 if you're single.
- Up to $12,000 if you're married filing jointly (both qualifying).
The deduction begins to phase out for taxpayers with modified adjusted gross income (MAGI) above $75,000 for single filers and $150,000 for married couples filing jointly.
Because this deduction reduces your taxable income, it may lower your federal tax bill. For some retirees, it could even eliminate their federal income tax liability. However, it doesn't change the IRS formula used to determine whether Social Security benefits are taxable.
What can I do to reduce my tax bill?
Keep an eye on your combined income
Withdrawals from traditional IRAs and 401(k)s, pension income, investment earnings, and part-time wages can all increase the taxable portion of your Social Security benefits.
Review your tax withholding
If you expect to owe taxes, you can request federal withholding from your Social Security benefits by filing IRS Form W-4V.
Plan retirement withdrawals carefully
Coordinating withdrawals from taxable, tax-deferred, and Roth accounts may help manage your taxable income over time.
Work with a tax professional
If your income varies or you're making large withdrawals, personalized planning can help avoid surprises and potentially reduce liability.
The Bottom Line
For next year, Social Security benefits are still subject to the existing federal tax rules. The temporary senior deduction may reduce taxes for many retirees, but it doesn't eliminate the taxation of Social Security benefits.
The best way to estimate your tax bill is to calculate your combined income, review your expected retirement income for the year, and adjust your withholding or estimated tax payments if needed.