Social Security benefits are still subject to federal income tax in 2026 based on your combined income, with up to 85% potentially taxable, but new senior tax deductions might reduce the tax burden for many retirees, and some states also tax benefits. While some proposed legislation aims to eliminate this tax, it hasn’t become law, so expect continued taxation unless Congress acts.
Federal Taxation in 2026
- Combined Income Formula: Your taxable Social Security amount depends on your “combined income”: Adjusted Gross Income (AGI) + nontaxable interest + 50% of your Social Security benefits.
- Taxable Tiers:
- If combined income is $25,000–$34,000 (single) or $32,000–$44,000 (joint), up to 50% of benefits may be taxable.
- If combined income exceeds $34,000 (single) or $44,000 (joint), up to 85% of benefits may be taxable.
- New Deductions: An enhanced deduction for seniors aged 65+ (from 2025-2028) could help nearly 90% of beneficiaries pay less federal tax on benefits.
State Taxation in 2026
- Varies by State: 41 states and D.C. do not tax Social Security benefits, but 9 states do, including Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont (though often with exemptions). West Virginia stops taxing benefits in 2026.
What Might Change (But Isn’t Law Yet)
- You Earned It, You Keep It Act: This proposed bill seeks to eliminate federal taxes on Social Security benefits starting in 2025, but it’s not enacted law.
Key Takeaway: Unless new laws pass, expect to pay federal and potentially state taxes on your Social Security benefits in 2026, but new deductions could significantly lower your federal tax bill.
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