Are You Actually Getting No Tax on Social Security When You File Taxes This Year?

President Trump’s signature campaign promise focused on eliminating taxes on Social Security benefits. The President declared victory on this issue, indicating that the passage of the One Big Beautiful Bill Act has eliminated taxes on Social Security for the majority of retirees. 

So, will you benefit from this bill and be able to avoid taxes on your Social Security retirement benefits this tax filing season? Here’s what you need to know. 

Here’s the truth about taxes on Social Security

Unfortunately for retirees hoping that taxes on Social Security would disappear, the One Big Beautiful Bill Act actually made no changes at all to the rules on when your benefits are taxed. Both before and after its passage, the rules are that:

• Single tax filers owe taxes on up to 50% of benefits once their provisional income is $25,000 and on up to 85% of benefits once their provisional income hits $34,000. 
• Married joint filers owe taxes on up to 50% of benefits once their provisional income is $32,000 and on up to 85% of benefits once their provisional income hits $44,000. 

Provisional income is half of Social Security benefits, all taxable income, and a limited amount of non-taxable income, such as MUNI bond interest. These thresholds are not indexed to inflation, so they won’t change over time.

Nothing about these rules was changed at all in the One Big Beautiful Bill Act, and anyone whose income goes above these limits will owe tax on part of their benefits.

However, what was changed, and what allowed the President to declare victory, is that a new senior deduction was added. Retirees 65 and over can now claim an additional $6,000 per person deduction if their income is below $75,000 as a single filer or $150,000 as a married joint filer. The deduction begins phasing out above these limits. 

With this deduction, combined with existing standard or itemized deductions, many retirees end up without much, if any, taxable income. So, they don’t end up having to pay tax on Social Security benefits because of this. However, not all seniors are covered, with those under 65 and higher earners left out. 

Furthermore, the new $6,000 deduction is temporary and in effect only until 2028, so the relief for those who have it is short-lived. 

Make sure you’re prepared if the IRS will take a cut

The reality is that taxes on Social Security are still something you need to think about, either this year if the new $6,000 deduction doesn’t wipe out your liability or in the coming years when the new deduction expires unless lawmakers extend it. 

If you are still working and investing for retirement, you can avoid owing taxes on Social Security if you invest in a Roth IRA or 401(k) instead of a traditional account, as distributions from Roth accounts are not taxable and don’t count in the provisional income calculation. If you are already retired and your income is above the thresholds where Social Security benefits become taxable, you need to be prepared to give the IRS a cut — at least in a couple of years when the deduction ends.

Both current and future retirees could benefit from working with a financial advisor to better understand their tax situation and to explore options for reducing their IRS bill so they can use more of their retirement money for essential expenses like medical care and for fun purchases that allow them to enjoy their hard-earned retirement.