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Think your Social Security check is yours to keep? Think again.
Nearly half of all beneficiaries have some form of tax liability on their benefit payment, according to Pew Research. Simply put, if you earn a middle to high income, you’re likely to owe some of your benefits back to the government (1).
Depending on your family’s combined provisional income, you could owe taxes on either 50% or 85% of your benefits (2). As of 2026, the combined provisional income threshold is $25,000 for a single taxpayer, $32,000 for a couple filing jointly.
If you live in a state that also levies a tax on these benefits, your annual tax bill could be worth thousands of dollars.
Fortunately, there are ways to lower or even eliminate these taxes. Here are the top five strategies you should consider for 2026.
Nine states across the country charge an additional tax on Social Security benefits, according to the AARP (3). This includes Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia.
Some of these states may offer special exemptions depending on your age and income. Still, the most effective way to eliminate this tax is to move to a state that does not levy it.
Relocating could also reduce other taxes, help you downsize your home and lower your overall cost of living.
The Internal Revenue Service (IRS) includes half of your Social Security benefits in the combined income calculation used to determine tax liability. Half is the ratio lawmakers considered fair when they first implemented taxes on benefits back in 1983 (3).
If you delay your claim, you may reduce your combined income for a period in retirement. For example, if you retire at 62 but wait until 67 to claim, you would have five years without benefits counted toward that calculation. That could keep you under the income thresholds for taxation.
Delaying also increases your monthly benefit. Payments rise gradually each year you wait, up to age 70, according to the Social Security Administration (4).
Simply put, careful timing can lower your tax bill and boost your future payouts.
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Distributions from a Roth account are not included in the provisional income calculation, according to Fidelity (5). That makes them a powerful tool for retirees trying to manage taxes.
A retiree who needs $20,000 to cover living expenses could withdraw it from a Roth account instead of a traditional IRA. That may help them avoid increasing provisional income and keep more of their Social Security benefits tax-free.
This strategy works best for households that contributed to Roth accounts earlier in their careers or converted traditional IRAs during lower-income years.
If you’re 65 or older, you may qualify for an enhanced seniors deduction available over the next few years (6). Eligible individuals can claim an additional $6,000 deduction on top of their standard or itemized deduction in 2026, which is subject to income limits.
The deduction applies per person. A couple over the age limit and under the income limit together could benefit from up to $12,000 in combined enhanced deductions.
If you are holding investments with paper loss, such as an underperforming stock or mutual fund, selling them could create cash to offset taxable income. Tax-loss harvesting allows you to reduce taxable income by up to $3,000 a year, according to Fidelity (7).
Selling losing investments to fund expenses while staying below the provisional income thresholds could reduce or eliminate taxes on your benefits.
This approach can be especially useful in volatile markets, when paper losses can be turned into tax advantages without charging your long-term asset allocation.
If you’re a middle or upper-income retiree, some of your Social Security benefits may be taxable. But with careful planning and strategic moves, you may be able to cut that bill or even reduce it to zero.
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Pew Research (1); IRS (2, 6); AARP (3); Social Security (4); Fidelity (5, 7).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
