Is Your Social Security Income in US – Taxable?

Retirement should be a time to relax, reflect, and enjoy the fruits of your labor. But for many seniors, one lingering question remains: Is the income I receive from Social Security taxable? The answer is – it depends ?

With the new tax law in effect for 2025 through 2028, there’s good news and some caveats. Let’s break it down in a way that’s easy to understand, especially if you’re planning your retirement finances or helping a loved one do the same.

Big Beautiful Bill – The New Senior Deduction: A Welcome Relief

Under the updated tax law, seniors aged 65 or older and their spouses, if filing jointly can each claim a $6,000 deduction. This applies to tax years 2025 through 2028.

However, this deduction begins to phase out once your adjusted gross income (AGI) crosses certain thresholds:

1. $75,000 for individual filers
2. $150,000 for joint filers

The phase-out rate is 6%, but it won’t reduce your deduction below zero. According to the White House Council of Economic Advisors, this change means only about 12% of seniors will pay taxes on their Social Security benefits. That’s a significant drop and a win for retirees.

How the IRS Calculates Tax on Social Security

The IRS uses a “combined income” formula to determine if your Social Security benefits are taxable. Here’s what’s included in combined income:

Understanding Adjusted Gross Income (AGI)

Your AGI is your total income minus certain deductions—like student loan interest, retirement contributions, and health savings account (HSA) contributions. It’s the starting point for calculating your federal and state income tax.

Federal Tax Thresholds

If you file as an individual:

• Up to $25,000: No tax
• $25,000–$34,000: Up to 50% of benefits may be taxed
• More than $34,000: Up to 85% of benefits may be taxed

If you file jointly:

• Up to $32,000: No tax
• $32,000–$44,000: Up to 50% of benefits may be taxed
• More than $44,000: Up to 85% of benefits may be taxed

Tip: Consider tax-efficient withdrawals from retirement accounts and consult a financial advisor to minimize your taxable income.

Do States Tax Social Security Income?

While most states do not tax Social Security benefits, 9 states still do—and each has its own rules. Here’s a quick overview:

States That Tax Social Security (2024 Rules)

Note: Nebraska, Kansas, and Missouri eliminated their tax on retiree benefits in 2024.

*Modified adjusted gross income

Your modified adjusted gross income (MAGI) is your adjusted gross income with certain adjustments added back. Which adjustments you add back in will depend on the specific government benefit, subsidy, or credit you are checking your eligibility for