More than 70 million Americans receive Social Security benefits, and as the 2025 tax filing season unfolds, recipients face renewed questions about federal income taxes on those payments. The taxability of Social Security benefits depends on combined income thresholds that have remained unchanged since 1984, affecting a growing number of seniors. However, a new temporary deduction introduced under President Donald Trump’s One Big Beautiful Bill Act offers tax relief to some older Americans, though it does not eliminate the taxation of Social Security benefits entirely.
The legislation, signed into law in July, created a $6,000 deduction for taxpayers age 65 and older, available for tax years 2025 through 2028. This age-based deduction serves as a stand-in for Trump’s campaign promise of “no tax on Social Security,” but it operates differently than a blanket exemption.
Understanding the $6,000 Senior Deduction
The new deduction is available to seniors whether they itemize or claim the standard deduction, according to the legislation. Eligibility requires a valid Social Security number, and married couples must file jointly to claim the benefit. The deduction amount is per qualifying senior, meaning married couples where both spouses are over 65 can claim $12,000.
However, the deduction phases out at higher income levels. For married taxpayers filing jointly, the phase-out begins at $150,000, while other taxpayers face reduction starting at $75,000. The deduction decreases at a rate of 6% above these thresholds, disappearing completely at $350,000 for joint filers and $175,000 for other taxpayers.
Importantly, the deduction reduces taxable income but does not provide refunds to those with no tax liability. Additionally, the deduction does not change whether Social Security benefits are included in taxable income calculations. Recipients must still provide their SSA-1099 forms to tax preparers to determine benefit taxability under existing rules.
How Social Security Taxability Works
Whether Social Security benefits are taxable depends on combined income, a formula that adds Adjusted Gross Income, nontaxable interest, and half of Social Security benefits. For single filers, benefits become taxable when combined income exceeds $25,000. For married couples filing jointly, the threshold is $32,000.
These income thresholds have not been adjusted for inflation since 1984, according to tax experts. If the married filing jointly threshold had kept pace with inflation, it would now stand at approximately $99,000, meaning significantly fewer seniors would face taxes on their benefits.
The average retired worker received $1,976 per month in early 2025, totaling about $23,000 annually. For many recipients with additional income sources, this puts them above the taxability thresholds. Required minimum distributions from retirement accounts can push combined income higher, causing more benefits to become taxable.
Calculating Taxable Social Security Benefits
When benefits are taxable, typically up to 50% becomes subject to federal income tax. However, up to 85% of benefits can be taxable if combined income exceeds $34,000 for single filers or $44,000 for married couples filing jointly. No beneficiary pays federal income tax on more than 85% of their Social Security payments.
Different types of Social Security payments face varying tax treatment. Retirement benefits, spousal benefits, survivor benefits, and Social Security Disability Insurance are all potentially taxable using the same combined income formula. In contrast, Supplemental Security Income, a needs-based program for low-income elderly or disabled individuals, is never subject to federal income tax.
State Tax Considerations
Most states do not tax Social Security benefits. Only nine states—Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia—impose taxes on these payments in some form. Many of these states provide income-based exemptions or credits, meaning benefits are often not fully taxed at the state level.
The temporary nature of the new $6,000 deduction means Congress will need to decide whether to extend it beyond 2028. Meanwhile, proposals to adjust the decades-old combined income thresholds for inflation remain under discussion, though no legislative action is currently scheduled.
