Social Security taxes: what could change in 2026 for retirees

Many Americans are bracing for shifts that could influence how much of their monthly Social Security income they actually get to keep.

Lawmakers in Washington have been debating changes that could reshape tax burdens for retirees, especially as new deductions and legislative proposals move through Congress.

With millions relying on their benefits as a primary source of income, even small adjustments may carry meaningful consequences.

As 2026 approaches, seniors are watching closely to see which reforms become law and how those decisions will affect their financial stability.

How federal taxes apply to Social Security today​

Social Security benefits for retirees, survivors, and people with disabilities can be taxed depending on your filing status and combined income.

Need-based Supplemental Security Income is exempt, but other benefit categories are subject to tax rates tied to federal thresholds that have remained unchanged since 1984.

Combined income includes adjusted gross income, tax-exempt interest, and half of your annual Social Security benefits. For some recipients, these calculations can result in up to 85 percent of their benefits being taxable.

What could change in 2026​

New legislation could dramatically reduce how many seniors pay taxes on their benefits. The One Big Beautiful Bill Act created a $6,000 bonus senior deduction, running through 2028, which lowers taxable income for anyone 65 or older.

Another proposal, the You Earned It, You Keep It Act, aims to eliminate all federal taxes on Social Security starting with 2026 tax returns. Under that plan, the lost revenue would be offset by raising the cap on the Social Security payroll tax.

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State-by-state rules on taxing Social Security​

Nine states currently tax Social Security benefits, and each applies its own income limits, credits, or exemptions. Some states, like Colorado and Connecticut, offer full exemptions for many residents depending on their income levels.

Others apply partial phaseouts or flat tax structures, including Minnesota, Vermont, and Utah. West Virginia is in the process of phasing out its tax entirely, with full exemption beginning for 2026 returns.

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The impact of the bonus senior deduction​

From 2025 through 2028, adults aged 65 and older can claim an additional $6,000 deduction on top of other standard deductions.

Married couples filing jointly can claim up to $12,000, creating meaningful relief for households living on fixed incomes.

This deduction will significantly reduce the number of seniors who owe federal taxes on their Social Security benefits.

According to the White House Council of Economic Advisors, the share of seniors exempt from Social Security taxation could rise from 64 percent to 88 percent under the expanded deduction.

Read next:

• Lawmakers push Social Security bill that could add $200 to monthly checks
• Are retirees really getting the tax breaks Trump promised? Here’s what’s actually changing

Key Takeaways

• Federal taxes on Social Security may shift in the coming years as lawmakers weigh proposals to ease burdens on retirees.
• Several states continue taxing benefits under their own rules, while others are phasing those systems out or expanding exemptions.
• The new senior bonus deduction is expected to spare millions from paying federal tax on their benefits through at least 2028.
• With additional legislation under consideration, many retirees are waiting to see which changes will take effect in 2026.

These ongoing discussions could influence retirement income for households across the country. Do you think federal taxes on Social Security should be eliminated entirely for seniors? Share your thoughts in the comments below.