Social Security taxation in 2026 turns on two central questions: how much income a beneficiary receives and where that person lives. Most states do not tax Social Security, but the federal government may still claim part of the benefits when income exceeds applicable limits.
Not every beneficiary will face that federal bill. Just over half of Social Security beneficiaries will owe federal taxes on their benefits in 2026, according to the Congressional Budget Office.
The decision depends on total income, including money from pensions, retirement accounts, wages, and other sources. The IRS uses a calculation known as combined income to determine how much of a person’s Social Security benefits may be taxable.
Adjusted gross income is part of that calculation and includes wages, pensions, and taxable retirement withdrawals. Once beneficiaries know their combined income, they can determine how much of their Social Security may be subject to federal taxes.
Special rules apply to married people filing separately. Anyone who lived with a spouse at any point during the year could owe taxes on up to 85% of benefits regardless of income, while the $25,000 threshold applies to those who lived apart for the entire year.
Actual liability also depends on the taxpayer’s federal bracket and any available deductions or credits. The IRS provides a free tool for beneficiaries who want to determine whether their Social Security income is taxable.
“Social Security income has always been partially tax-free,” said Luke Delorme, a CFP and director of financial planning at Tableaux Wealth. “Even at high income levels, only 85% of Social Security benefits are taxable.”
The 2025 One Big Beautiful Bill Act did not eliminate federal taxes on Social Security or change the combined income thresholds. Those thresholds have not increased since 1994, leaving the underlying federal taxation framework intact.
Instead, the tax law signed by President Trump created an additional deduction for people age 65 and older. It is worth up to $6,000 per person, or $12,000 for a married couple filing jointly when both spouses qualify, and is available for tax years 2025 through 2028.
The deduction begins phasing out when modified adjusted gross income exceeds $75,000 for individual filers or $150,000 for joint filers. Depending on a beneficiary’s other income, it could eliminate taxes owed on Social Security benefits or merely reduce the final tax bill.
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The White House said the deduction increases the share of seniors who effectively owe nothing on their benefits from about 64% to about 88%. That outcome does not mean the federal tax on Social Security has formally disappeared.
Why did the law use a deduction rather than abolish the tax outright? “The new deduction isn’t as costly,” said Delorme.
Completely eliminating federal taxes on Social Security benefits would have cost an estimated $1.4 trillion over 10 years, according to the Bipartisan Policy Center. The senior deduction that became law is projected to cost about $93 billion over the same period.
State taxation presents a more favorable picture for most retirees. Only eight states still tax Social Security benefits in 2026, and nearly all of them provide some form of relief based on income, age, or both.
New Mexico, for example, exempts Social Security benefits from state income taxes when adjusted gross income is $100,000 or less for a single filer. The exemption also applies to married couples filing jointly with adjusted gross income of $150,000 or less.
West Virginia has now moved entirely away from taxing Social Security. The state allowed residents to deduct 35% of taxable benefits in 2024 and 65% in 2025, and all benefits are exempt from West Virginia income taxes in 2026 regardless of earnings.
Beneficiaries can use a Social Security calculator to estimate monthly payments based on earnings history and the planned claiming date. After estimating benefits, retirees can assess potential federal and state taxes alongside their other income.