While Social Security benefits are taxed for individuals who meet certain income thresholds, various bills have attempted to lower or eliminate that burden: In Sep. 2025, Senator Ruben Gallego, a Democrat from Arizona, reintroduced the You Earned It, You Keep It Act, which would stop federal taxation of Social Security benefits.
To make up for lost revenue, Gallego’s plan would expand Social Security payroll taxes to all annual earnings over $250,000.
Republican Sens. Tommy Tuberville of Alabama and Tim Sheehy of Montana have introduced similar legislation, the Senior Citizens Tax Elimination Act.
“Seniors work the majority of their adult lives so that they can spend their retirement comfortably,” Tuberville, who is on the Senate Aging Committee, said in a statement. “In a day and age where the cost of living has skyrocketed, our seniors should not experience a second tax on their Social Security.”
Learn how Social Security is taxed, which states tax benefits and other ways to save for retirement.
How Social Security is taxed
Filing Status Combined income Taxable portion of benefits Single/Head of householdUnder $25,000None$25,000- $34,000Up to 50%Over $34,000Up to 85%Married filing jointlyUnder $32,000None $32,000 – $44,000Up to 50%Over $44,000Up to 85%Married filing separatelyUnder $25,000 and live apart from spouseNone $25,000 – $34,000 and live apart from spouseUp 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%.
The One Big Beautiful Bill Act has added a $6,000 bonus senior deduction that substantially reduces how many retirees meet those income limits, at least through 2028.
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. You can also use IRS Form W-4V for voluntary withholding.
Which states tax Social Security?
Eight states tax Social Security benefits, although income thresholds and exemptions vary.
Colorado
Colorado taxpayers who are 65 by the end of 2026 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 in Connecticut are fully exempt if your federal AGI for 2026 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 2026 combined (or provisional) income is below a certain threshold. To determine your combined income, take your AGI before Social Security and add tax-exempt interest (such as interest from municipal bonds) and 50% of your Social Security benefits.
If it’s below $25,000 ($32,000 for joint filers), you don’t pay taxes on your benefits. 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 combined income is above $34,000 for an individual or $44,000 for a married couple filing jointly, up to 85% of benefits may be 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 2026, 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.
Have over $7,500 in tax debt? A tax relief service may be right for you
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Anthem Tax Services is licensed in all 50 states and requires clients to have $10,000 in tax debt to enroll. It advertises a money-back guarantee if it doesn’t save you money or rework your payment schedule.
The bonus senior tax deduction
Effective at least 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%.
How to boost your retirement savings
Social Security won’t cover all your expenses in retirement. Consider these strategies to grow your nest egg
1. Max out your retirement accounts
If you’re age 60 to 63 in 2026 and your plan allows it, you can contribute an extra $11,250 rather than the $8,000 standard catch-up amount.
2. Enjoy guaranteed income with annuities
Annuities are contracts with a life insurance company that can include guaranteed monthly income. As older Americans worry about outliving their retirement savings, they’re growing in popularity — according to insurance trade association LIMRA, total U.S. annuity sales reached a record $464.1 billion in 2025.
Some annuities offer additional benefits, such as cost-of-living adjustments to offset inflation and increased payouts to cover long-term care.
Worried about outliving your retirement savings? Annuities can help.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Immediate annuities, fixed annuities, fixed indexed annuities, registered index-linked annuities
$10,000 for Athene Agility, Athene Protector, Athene MaxRate, Athene Ascent Pro and Athene Performance Elite
3. Make your savings work harder
Open a high-yield savings account or CD. You’re not going to get rich putting all your money in an HYSA or a CD, but you’re not going to lose any of it, either.
With some CDs paying more than 4.00%, you can lock in a rate now before Fed rate changes reduce their earning potential.
Competitive APYs are available through CDs offered by these issuers.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Annual Percentage Yield (APY)
LEARN MORE
Bread Savings™ (formerly Comenity Direct) is a product of Comenity Capital Bank, a Member FDIC.
Bonds are a safe bet. Bonds offer regular interest payments and have historically offered lower risk than the stock market. Pay close attention to ratings, though. Bonds with AAA ratings indicate very low default risk, whereas bonds with subpar ratings (BBB or lower) carry higher default risk.
Update your portfolio. The closer you get to retirement, the more you’ll need to update your investments to adopt a lower-risk profile. While that does not mean abandoning the market entirely, it does require a heightened focus on dividend-paying stocks and conservative funds.
If you’re within five years of retirement, your priority should shift toward preserving capital and increasing your allocation of low-risk investments like bonds, CDs and Treasuries.
4. Look into a reverse mortgage
If you’re a homeowner, you could turn your home equity into cash with a reverse mortgage. The upside is that you’ll have additional funds to live on, but you risk foreclosure and you could be leaving your heirs with a financial mess to clean up.
You’ll receive a lump sum, monthly installments, or a line of credit, and so long as you keep up with insurance, property taxes, and upkeep, repayment isn’t due until you die, sell the home, or stop making it your primary residence.
FHA-approved Home Equity Conversion Mortgages (HECMs) require borrowers to be at least 62, but banks also have proprietary reverse mortgages for borrowers as young as 55.
You can borrow against the equity accrued in your home with a reverse mortgage
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Flex Payment HECM, Flex Payment jumbo reverse, reverse for purchase, refinancing
Up to $4 million for Flex Payment jumbo mortgages
5. Keep working
While the full retirement age (FRA) for anyone born after 1960 is 67 years old, you’ll earn credits that increase your monthly check by a percentage (about 8% per year) for each month you wait to claim, up to age 70.
The earliest you can collect Social Security is 62, but in 2026, the income cap is $24,480 a year. Anything over that, you’ll sacrifice $1 of your benefit check for every $2 you earn above the maximum.
In the year you reach your FRA, you can earn up to $65,160 before the month you reach FRA. If you earn more, your benefits are reduced by $1 for every $3 you earn.
Starting the month you reach FRA, you can earn any amount and still receive your full Social Security benefits.
Social Security FAQs
When can I start collecting Social Security?
You can start collecting Social Security at age 62, but you won’t receive 100% of your benefits until you reach full retirement age (between 66 and 67, depending on your birth year). If you put off claiming until 70, you’ll qualify for 124% of your total retirement benefit.
How much Social Security will I get?
The size of your Social Security check depends on your age and earning history. In June 2025, the average monthly Social Security payment was about $2,030 for retired workers. The average across all beneficiaries—including disabled workers, survivors, and dependents—was about $1,861 per month.
Is Social Security taxable?
Your Social Security benefits may be taxed depending on your adjusted gross income. Individual filers with an AGI of $25,000 or less are exempt from having their benefits taxed. (The threshold for married couples filing jointly is an AGI of $32,000.)
How is Social Security calculated?
Your Social Security benefits are calculated using a formula that includes your work history, lifetime earnings and the age you began filing claims. You can estimate your monthly benefits by age and earnings using the SSA’s benefits calculator.
Subscribe to the CNBC Select Newsletter!
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice to help them make informed financial decisions. Every retirement article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of retirement. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
