After spending your whole life working hard and paying the payroll taxes that partially fund Social Security benefits, you may finally be ready to dip your hand in the cookie jar. But Uncle Sam could also be coming for a bite.
In fact, up to 85 percent of your Social Security benefits could be taxed. This could be a shock to many, considering how important these funds are to Americans.
About 74 million Americans receive Social Security benefits. Moreover, 63 percent of beneficiaries say Social Security covers at least half of their income, according to the Pew Research Center, and 27 percent depend on it as their only sources of income.
But whether your Social Security benefits get taxed actually depends on your income.
Before we move forward, it’s important to note that Supplemental Security Income (SSI) is never taxed.
Now, let’s look at the other components that fall under the Social Security benefits umbrella: retirement benefits, Social Security Disability Insurance (SSDI), and benefits for spouses and other survivors of a family member who has died.
These are taxed based on income.
How Are Social Security Benefits Taxed?
Social Security benefits may be taxable depending on your total income or “combined income.”
The Internal Revenue Service uses this formula to determine combined income:
Combined income = Adjusted gross income + nontaxable interest + 50 percent of your Social Security benefits.
If you’re married and filing jointly with your spouse, both of your combined incomes and half of your Social Security benefits are used to calculate combined income.
But before we start crunching numbers, let’s break these down to give you a better understanding of what goes into the formula.
Adjusted gross income (AGI) is your gross income for the year minus adjustments like contributions to a traditional individual retirement account (IRA).
Here are some examples of gross income.
- wages
- interest
- dividends
- capital gains
- taxable distributions from traditional 401(k)s and IRAs (less adjustments)
- pension payments
- business income
- rental income
- unemployment benefits
- gambling winnings
Common types of nontaxable or tax-exempt interest include interest generated from the following:, municipal bonds, private-activity bonds, bonds issued by U.S. territories, and Series EE and Series I bonds used for qualified higher education expenses.
Will My Social Security Benefits Be Taxed?
Your Social Security benefits may be taxed based on your combined income, which is also referred to as provisional income.
For example, if you’re filing single and your combined income is less than $25,000, none of your benefits will be taxed. If it’s between $25,000 and $34,000, up to 50 percent of your benefits will be taxed. And if it’s $34,000 or more, up to 85 percent of it will be taxed.
If you’re married and filing jointly with your spouse and your combined incomes are below $32,000, none of your benefits would be taxed. If it’s between $32,000 and $44,000, up to 50 percent will be taxed. And if it’s more than $44,000, up to 85 percent would be taxed.
An Example of Social Security Taxation
Let’s say you’re a single taxpayer and your AGI is $40,000, you earn $1,000 in tax-exempt interest, and receive $24,000 in Social Security benefits for the year.
That equates to a combined income of $65,000. This means up to 85 percent of your Social Security benefits would be taxed.
In other words, up to $55,250 would be subject to taxation.
However, you may also have to deal with state taxes.
Which States Tax Social Security Benefits?
The following states tax Social Security benefits as of 2026: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia (no benefits will be taxed beginning with 2026 returns filed in 2027).
The rules for taxation of Social Security benefits vary widely by state. So it’s important to check with your state’s Department of Taxation for the latest updates.
But there are ways to minimize the hit of Social Security taxation.
Take the Senior Bonus Deduction
The One Big Beautiful Bill Act rolled out a new senior deduction. Those aged 65 and older can claim an additional $6,000 ($12,000 for married couples filing jointly) for tax years 2025 to 2028. This applies whether you itemize or claim the standard deduction. This is in addition to the regular extra standard deduction for seniors, which is $2,000 (single filers) and $3,200 (joint filers).
But to qualify for the full deduction, you must also have a modified adjusted gross income (MAGI) of under $75,000 (single filers) and $150,000 (joint filers).
The deduction is reduced by 6 percent (but not below zero) for MAGIs that exceed $75,000, or $150,000 for joint filers.
It phases out completely for MAGIs above $175,000 (single filers) and $250,000 (married filing jointly).
By claiming these deductions, you could essentially reduce your taxable income and may owe less or no taxes on your Social Security benefits.
This new bonus senior tax deduction would mean that only about 12 percent of seniors will pay taxes on their Social Security benefits, according to a White House Council of Economic Advisors analysis.
The Bottom Line
You worked hard for your Social Security payments. But even in retirement, these may still be taxed. It ultimately comes down to your income. But you may get some relief through the new bonus senior deduction which you could claim when you file 2026 taxes in 2027.
The Epoch Times copyright © 2026. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
