Social Security provides nearly 74 million Americans with a vital source of funding. Nearly two-thirds (63%) of recipients say they rely on their checks for at least half of their personal income, according to the Pew Research Center, and more than a quarter (27%) describe it as their sole source of income.
Since 1984, Social Security benefits have been federally taxed on individuals whose income exceeds specific thresholds. But the One Big Beautiful Bill Act has added a $6,000 bonus senior deduction that will substantially reduce how many retirees meet those limits, at least through 2028.
Various bills have been introduced to lower or eliminate federal taxes on Social Security altogether, most recently the You Earned It, You Keep It Act, reintroduced by Rep. Angie Craig in April 2025. According to Craig, the loss of tax revenue would be countered by raising the cap on the Social Security payroll tax.
If the measure becomes law, federal taxes on Social Security would end starting with 2026 tax returns, which will be filed in 2027.
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Taxing Social Security
How Social Security is taxed
While need-based Supplemental Security Income payments are not taxed, Social Security benefits for retirees, survivors and people with disabilities are. The tax rate on your benefits is based on your filing status and your “combined income,” which is the sum of your adjusted gross income (AGI), tax-exempt interest income and half of your annual Social Security benefits.
| Filing Status | Combined income | Taxable portion of benefits |
|---|---|---|
| Single/Head of household | Under $25,000 | None |
| $25,000- $34,000 | Up to 50% | |
| Over $34,000 | Up to 85% | |
| Married filing jointly | Under $32,000 | None |
| $32,000 – $44,000 | Up to 50% | |
| Over $44,000 | Up to 85% | |
| Married filing separately | Under $25,000 and live apart from spouse | None |
| $25,000 – $34,000 and live apart from spouse | Up to 50% | |
| More than $34,000 and live apart or lived with spouse at all during the year |
Up to 85% |
Example: If your AGI is $30,000, your nontaxable interest is $1,000 and you receive $15,000 in Social Security benefits, your combined income would be $30,000 + $1,000 + (0.50 × $15,000) or $38,500.
In that case, up to 85% of your benefits would be taxable.
The segment of Social Security recipients whose benefits are currently taxed is a subject of debate: The White House puts it at 36%, while the Social Security Administration (SSA) says it’s closer to 50%.
Withholding taxes from your Social Security check
If you believe your benefits will be taxed, you can request to have the money withheld throughout the year, rather than paying in full at tax time. The IRS lets you choose how much tax to withhold from your monthly Social Security payments: 7%, 10%, 12% or 22%.
To request withholding, log into your Social Security account on the agency’s website or call the SSA directly at 800-772-1213.
Which states tax Social Security?
Nine states tax Social Security benefits, although income thresholds and exemptions vary.
Colorado
Colorado taxpayers who are 65 by the end of 2025 can subtract the full amount of their federally taxed Social Security benefits from their taxable income. Recipients between 55 and 64 with an AGI of $75,000 or less ($95,000 or less for married filing jointly) can also deduct the full amount of their benefits.
If your AGI is above those limits, you can still deduct up to $20,000 of your retirement income, including Social Security, pensions and IRAs.
Connecticut
Social Security benefits are fully exempt if your federal AGI for 2025 is below $75,000 ($100,000 for married filing jointly). If your AGI is at or above that threshold, you may still qualify for a partial exemption. You can determine your eligibility using the Connecticut Department of Revenue Services’ online calculator.
Minnesota
Social Security benefits are fully exempt for Minnesota residents with an AGI below $84,490 ($108,320 for joint filers). Above that, there is a partial exemption that is phased out by 10% for each additional $4,000 of AGI. (For married couples filing separately, it’s 10% for each additional $2,000 of AGI over $54,160.)
Montana
In Montana, benefits are exempt if your 2025 AGI is below $25,000 ($32,000 for joint filers). If it’s between $25,000 and $34,000 ($32,000 and $44,000 for joint filers), up to 50% of your benefits are taxable.
If your AGI is above $34,000 ($44,000 for joint filers), up to 85% of your benefits are taxable.
New Mexico
Since 2022, New Mexico residents with an AGI of up to $100,000 ($75,000 for married filing separately, $150,000 for married filing jointly) have been exempt from paying taxes on Social Security. Above that, benefits are subject to the standard state income tax, which, in 2025, ranges from 1.7% to 5.9%.
Rhode Island
Rhode Island residents who have reached the full retirement age and have an AGI below $107,000 ($133,750 for married filing jointly) are exempt from having their Social Security benefits taxed. If your AGI is above these limits, your benefits are subject to the state income tax, which ranges from 3.75% to 5.99%.
Vermont
Social Security benefits for residents with an AGI above $60,000 are subject to Vermont income tax. If your AGI is between $50,000 and $60,000 ($65,000 and $75,000 for joint filers), you may be eligible for a partial exemption. Recipients with an AGI below $50,000 ($65,000 for joint filers) are fully exempt.
Utah
Benefits are subject to Utah’s 4.5% flat state income tax, although many retirees qualify for a nonrefundable Social Security Benefits Credit that significantly reduces or eliminates their tax burden.
The credit is based on your modified adjusted gross income (MAGI)
- Individuals: Full credit for MAGI up to $54,000
- Married filing jointly, head of household: up to $90,000
- Married filing separately: up to $45,000
The credit is reduced by 2.5 cents for each dollar of MAGI above these thresholds.
West Virginia
West Virginia is phasing out its tax on Social Security benefits. For 2025 returns (filed in 2026), 65% of benefits will be tax-exempt. For 2026 returns (filed in 2027), benefits will be completely exempt. During the phaseout, there is no AGI exemption for lower-income residents.
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The bonus senior tax deduction
Effective for tax years 2025 through 2028, taxpayers 65 and older can claim an additional $6,000 deduction, whether they itemize their returns or not. The deduction is in addition to the standard deduction for seniors and the visually impaired and is per individual, so married couples filing jointly can claim up to $12,000.
The write-off will reduce or eliminate the taxable income for millions of Americans. The White House Council of Economic Advisors claims the bonus deduction will increase the share of seniors who won’t have to pay taxes on Social Security from 64% to 88%.
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