Many older Americans today depend on Social Security for their retirement plan. But for years, seniors have griped about having to pay taxes on those benefits.
Taxes on Social Security are actually a double whammy because those benefits are typically earned by paying into the system. To have wages taxed to qualify for Social Security — only to then have those benefits taxed — seems overwhelmingly unfair to many people. And President Trump clearly agreed, as evidenced by the fact that he said he would try to eliminate taxes on Social Security benefits during his presidential campaign.
But while a recently signed bill lets many seniors off the hook from having their Social Security benefits taxed right now, that doesn’t mean those benefits are now permanently tax-free.
What the One Big Beautiful Bill Act did for seniors
Last year, the One Big Beautiful Bill Act (OBBBA) was signed into law. And one of its most celebrated changes was a new $6,000 senior tax deduction. Thanks to that deduction, the White House estimates that 88% of seniors who collect Social Security benefits will not have to pay taxes on their benefits.
But that doesn’t mean taxes on Social Security benefits went away. The OBBBA’s new senior tax break is a temporary deduction for tax years 2025-2028 only. It’s worth up to $6,000 for single tax-filers and up to $12,000 for married couples filing jointly. Seniors can qualify for the deduction this year if they turn 65 by December 31.
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Not everyone gets the new senior tax deduction
Not only is the new senior tax deduction temporary, but it’s not a given that everyone on Social Security will qualify for it. The $6,000 senior deduction phases out starting at $75,000 in income for single tax-filers or $150,000 for married couples filing jointly. It then disappears entirely at $175,000 and $250,000 of income, respectively.
Not only that, but the deduction is limited to people who are 65 and older. But Social Security allows seniors to file for benefits once they turn 62.
This means that many early claimants may not be eligible for the new deduction. And without a way to lower their taxable income in a meaningful way, some seniors in that situation may get stuck paying taxes on their Social Security benefits today.
Taxes on Social Security benefits still exist
The OBBBA did not get rid of taxes on Social Security. Rather, it gave seniors a way to lower their income to avoid those taxes. There’s a big difference.
Taxes on Social Security benefits depend on a senior’s combined income. Combined income is calculated as adjusted gross income plus tax-exempt interest income plus 50% of annual Social Security.
Single tax-filers with a combined income of $25,000 or more and joint filers with a combined income of $32,000 or more have to pay taxes on their Social Security benefits. For some people, the $6,000 deduction pushes their combined income below these thresholds. For others, it doesn’t.
But either way, the $6,000 senior tax deduction goes away after the 2028 tax year. At that point, more seniors could start owing taxes on their Social Security benefits. This is especially likely to happen as cost-of-living adjustments increase benefits, which are part of the combined income formula.
Prepare for Social Security benefit taxes to come back
Once the $6,000 senior tax deduction sunsets, you could end up having to pay taxes on your Social Security benefits, even if you’re not required to pay those taxes right now. So it’s important to plan for that and know how to potentially get out of it.
One way to avoid having your Social Security taxed is to limit withdrawals from your retirement savings so you’re under the combined income thresholds. If you’re single and 50% of your annual Social Security benefit is $12,000, keeping retirement plan withdrawals below $13,000 means you shouldn’t have your benefits taxed. That way, your combined income is below $25,000, assuming you don’t collect tax-exempt interest income from investments.
But that approach may mean limiting your retirement income. So an even better bet may be to do a Roth conversion, where you move funds from a traditional IRA or 401(k) into a Roth IRA. Roth IRA withdrawals do not count toward the combined income formula.
Bottom line
Your Social Security benefits probably play a key role in your retirement plan. Right now, you may be exempt from paying taxes on those benefits thanks to the $6,000 senior tax deduction. And if you’re someone who gets most or all of your income from Social Security, you may not see things change once the $6,000 deduction goes away.
But if you used to owe taxes on your Social Security benefits and only became exempt following the OBBBA, you should know that the reprieve you’re getting may only be temporary. It’s important to prepare for things to change in 2029, and, if possible, to make the right moves to avoid being taxed on your benefits so you’re able to keep more of that money.
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Author Details
Maurie Backman
Most retirees will make their Social Security claiming decision exactly once, which is why Maurie Backman has spent more than 20 years helping them understand it. She covers benefit calculations, COLA forecasts, and the policy changes that quietly reshape what retirees receive each month. Her work has appeared in Kiplinger, The Motley Fool, 24/7 Wall St., Bankrate, and U.S. News & World Report.
