Do I have to pay
taxes on my Social Security retirement benefits? I heard President Trump’s
big, beautiful bill eliminated that. What can you tell me?
About to Retire
Dear About,
No, the new law, better known as the One Big Beautiful Bill
Act, did not eliminate Social Security taxes. It did, however, provide a temporary
“senior bonus” deduction, starting in 2025 through 2028, of up to $6,000 that will
apply to taxpayers age 65 and older who earn up to $75,000 for singles or
$150,000 for joint filers. If you earn over that amount, the deduction starts
phasing out.
Also note the senior bonus is a deduction, not a
refundable credit, so it will not help lower-earning seniors who owe no income
taxes.
Who owes SSA taxes?
Whether or not you’ll be required to pay federal income tax
on your Social Security benefits will depend on your income and filing status.
About 40% of Social Security recipients have total incomes high enough
to trigger federal income tax on their benefits.
To figure out if your benefits will be taxable, you’ll need
to add up all your “provisional income,” which includes wages, taxable and
nontaxable interest, dividends, pensions and taxable retirement-plan
distributions, self-employment, and other taxable income, plus half your annual
Social Security benefits, minus certain deductions used in figuring your
adjusted gross income.
To help you with the calculations, get a copy of IRS
Publication 915 “Social Security and Equivalent Railroad Retirement Benefits,”
which provides detailed instructions and worksheets. You can download it at www.IRS.gov/pub/irs-pdf/p915.pdf or call the
IRS at 800-829-3676 and ask them to mail you a free copy.
After you do the calculations, the IRS says if you’re
single and your total income from all of the listed sources is:
—Less than $25,000, your Social Security will not
be subject to federal income tax.
—Between $25,000 and $34,000, up to 50% of
your Social Security benefits will be taxed at your regular income-tax rate.
—More than $34,000, up to 85% of your
benefits will be taxed.
If you’re married and filing jointly and the total from all
sources is:
—Less than $32,000, your Social Security won’t be
taxed.
—Between $32,000 and $44,000, up to 50% of
your Social Security benefits will be taxed.
—More than $44,000, up to 85% of your
benefits will be taxed.
If you’re married and file a separate return, you probably
will pay taxes on your benefits.
You also can find out if any of your benefits are taxable
through the IRS online tax tool that asks a series of questions that will help
you determine your status. To access this tool, visit www.IRS.gov/Help/ITA and click "Social Security or railroad retirement
tier I benefits — Are mine taxable?"
To limit potential taxes on your
benefits, you’ll need to be cautious when taking distributions from retirement
accounts or other sources. In addition to triggering ordinary income tax, a
distribution that raises your gross income can bump up the proportion of your
Social Security benefits that are subject to taxes.
How to file
If you find that part of your Social
Security benefits will be taxable, you’ll need to file using Form 1040 or Form
1040-SR. You also need to know that if you do owe taxes, you’ll need to
make quarterly estimated tax payments to the IRS, or you can choose to have it
automatically withheld from your benefits.
To have it withheld, you’ll need to complete IRS Form W-4V,
Voluntary Withholding Request (www.IRS.gov/pub/irs-pdf/fw4v.pdf), and file it with your local Social Security office.
State taxation
In addition to the federal government, nine states —
Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah,
Vermont and West Virginia — tax Social Security benefits to some extent too. If
you live in one of these states, check with your state tax agency for details.
Send your questions or
comments to questions@savvysenior.org or to Savvy Senior, P.O. Box
5443, Norman, OK 73070.
