Around 74 million Americans receive Social Security, and for many adults, these monthly payments comprise a substantial part of their income. According to the Pew Research Center, 63% of beneficiaries say Social Security accounts for at least half of their income, while 27% depend on it as their only source of income.1
Whether your Social Security benefits are taxed in 2026 depends on your total income and where you live. Federal taxes have applied to some recipients since 1984, but some new legislation — and proposals still moving through Congress — could alter how many retirees owe taxes during the next few years.
The legislation known as the One Big Beautiful Bill Act added a temporary $6,000 bonus senior deduction, reducing the number of retirees who meet the taxable-income threshold through 2028. For more information on how the One Big Beautiful Act may impact your income taxes, read our article. And if Congress passes the You Earned It, You Keep It Act, federal taxes on Social Security could end entirely beginning with 2026 tax returns (filed in 2027). As of early 2026, the bill is still pending.
How Social Security is taxed federally
Supplemental Security Income (SSI) is never taxed. However, retirement, disability, and survivor benefits may be taxable depending on your combined income. The IRS defines combined income as: Adjusted gross income (AGI) + nontaxable interest + 50% of your Social Security benefits.
The taxable portion of benefits varies by filing status:
| Filing Status | Combined Income | Taxable Amount of Benefits |
|---|---|---|
| Single/head of household | Under $25,000 | 0% |
| $25,000 – $34,000 | 50% | |
| Over $34,000 | 85% | |
| Married filing jointly | Under $32,000 | 0% |
| $32,000 – $44,000 | 50% | |
| Over $44,000 | 85% | |
| Married filing separately | Living apart: same thresholds as single | 0 – 85% |
| Living with spouse any time during the year | Up to 85% |
Example
If you are a single taxpayer and your AGI is $30,000, you earn $1,000 in tax-exempt interest and receive $15,000 in Social Security benefits:
>> $30,000 + $1,000 + $7,500 (half your benefits) = $38,500 combined income
>> You would owe taxes on up to 85% of your benefits.
Withholding taxes from your benefits
If you expect to owe taxes, you can contact the Social Security Administration to request withholding directly from your monthly Social Security payments. The IRS allows four withholding options: 7%, 10%, 12%, or 22%.
Which states tax Social Security benefits?
As of 2026, nine states tax Social Security benefits, though exemptions and income limits differ significantly.
- Colorado
Residents aged 65+ may subtract the full amount of federally taxable Social Security benefits. Those aged 55 – 64 may receive full or partial deductions depending on AGI ($75,000 or less for single filers; $95,000 or less for joint filers).
- Connecticut
Benefits are fully exempt for residents with a federal AGI below $75,000 ($100,000 for joint filers). Above those limits, a 75% exemption applies.
- Minnesota
Full exemption applies for AGI up to $84,490 ($108,320 for joint filers). Partial exemptions phase out by 10% per additional $4,000 of AGI (or $2,000 for married filing separately).
- Montana
No tax applies if AGI is below $25,000 ($32,000 for couples filing jointly). Benefits become partially taxable at AGI levels up to $34,000 ($44,000 joint) and up to 85% taxable above those levels.
- New Mexico
Residents with AGI up to $100,000 ($150,000 joint) remain exempt from state tax. Above that, benefits are taxed at the state’s 1.7% – 5.9% income-tax rate.
- Rhode Island
Residents at or above full retirement age qualify for exemption if AGI is below $104,200 ($133,250 joint). Above those thresholds, benefits are taxed at between 3.75% – 5.99%.
- Utah
Utah taxes Social Security benefits to the same extent as the federal government at a 4.5% flat rate but offers a Social Security Benefits Credit for many retirees. Full credit applies to:
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- Individuals with MAGI up to $54,000
- Joint filers and heads of household up to $90,000
- Married filing separately up to $45,000Note: the credit phases out by 2.5 cents for each $1 of MAGI over the thresholds.
- Vermont
Full exemption applies for AGI below $50,000 ($65,000 joint). Partial exemptions apply up to $60,000 ($75,000 joint). Benefits are taxable above these levels.
- West Virginia
The state completes its phase-out of Social Security taxation in 2026. All benefits are fully exempt on 2026 returns filed in 2027.
New senior bonus deduction
A significant tax change for older taxpayers comes in the form of a new benefit known as the “senior bonus deduction.” Introduced in the One Big Beautiful Bill Act, the senior deduction is an exemption for filers 65 and older and allows seniors to claim an additional $6,000, whether they itemize or take the standard deduction. This is on top of the existing extra standard deduction for seniors, which is $2,000 for individual filers and $3,200 for joint filers.
To qualify, you must be at least 65 and have a MAGI of under $175,000. Joint filers must both be at least 65 and have a combined MAGI of under $250,000.
10 ways to help minimize taxes on Social Security benefits
Many retirees can reduce or avoid taxation by strategically managing income. Consider these 10 strategies:
- Lower your combined income.
Because taxation depends on your combined income, lowering any part of the formula — AGI, tax-exempt interest, or other income — may reduce your tax.
- Delay claiming benefits.
If you have not yet claimed Social Security, delaying benefits until age 70 increases future payments, allows you to spend down taxable accounts first, and may reduce taxation once you begin collecting.
- Convert traditional IRA funds to a Roth IRA before claiming.
Roth withdrawals do not count toward combined income. Roth IRAs reduce taxable income during retirement and help avoid pushing Social Security benefits into taxable thresholds.
- Use Roth withdrawals during high-income years.
If you already have Roth savings, use Roth funds instead of IRA/401(k) withdrawals. Doing so may help keep AGI and combined income lower and reduce or eliminate Social Security taxation.
- Use qualified charitable distributions (QCDs) at age 70 ½+.
A QCD allows you to donate up to $100,000 per year directly from an IRA. This will help reduce your AGI, count towards required minimum distributions (RMDs), and help reduce the taxability of Social Security.
- Manage capital gains carefully.
Large gains may push you into taxable ranges. Strategies to manage gains include spreading the gains across years, using tax-loss harvesting, and timing major sales before or after claiming Social Security.
- Limit tax-exempt bond interest.
Municipal bond interest still counts toward combined income. Instead, consider tax-efficient ETFs, and Roth accounts.
- Manage part-time work.
Because earned income raises AGI, consider reducing working hours after claiming and pairing part-time work with Roth withdrawals.
- Use the senior bonus deduction.
The new deduction of up to $6,000 ($12,000 joint) can help keep you below income thresholds where benefits become taxable.
- Relocate to a state with no tax on Social Security.
In 2026, 41 states do not tax Social Security benefits. Moving may reduce state-level taxation.
For more information on Social Security — including how to keep more of what you’ve earned by minimizing taxes — contact your wealth advisor.
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Frequently Asked Questions
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Yes, unless Congress passes pending legislation, federal Social Security taxes still apply in 2026 based on your combined income.
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Add your AGI + nontaxable interest + 50% of your Social Security benefits. That number determines whether up to 50% or 85% of your benefits are taxable.
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No. In 2026, only nine states tax Social Security benefits, and most offer income-based exemptions.
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Yes, the deduction may help many retirees stay below taxable thresholds.
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Possibly. The You Earned It, You Keep It Act proposes eliminating federal Social Security taxes beginning with 2026 returns, but it has not yet become law.
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Yes. Strategies include lowering your combined income, delaying when you claim benefits, converting traditional IRA funds to a Roth IRA before claiming, using Roth withdrawals during high-income years, making qualified charitable distributions (QCDs) after age 70½, managing capital gains carefully, limiting tax-exempt bond interest, adjusting part-time work, taking advantage of the senior bonus deduction, and relocating to a state that doesn’t tax Social Security.
1 DeSilver, Drew. “What the data says about Social Security.” Pew Research Center, May 20, 2025.
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