Social Security Taxes Still Exist, Despite Rumors

Numerous confusing discussions regarding Social Security and tax reductions for older individuals in “One Big Beautiful Bill” predict a series of unpleasant situations at tax filing offices in the coming year.

It’s going to be messy when numerous uninformed seniors submit their 2025 tax forms. “Why am I being taxed on my Social Security income?” many are sure to question.

As early as July, I have seen social media posts from tax professionals who are anxious about the day they will need to tell their clients, “welcome to reality.”

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Yes, your Social Security remains85% taxable.Yes, I’m aware that’s what Trump continues to claim. But focus on what he actually signed, not just what he says,” he shouted for the 792,682,314th time into the emptiness,” shared Adam Markowitz, a registered tax agent from Florida, on X.

What is causing confusion among retirees regarding taxes

The presidential residence announced, yet again,No tax imposed on Social Securityon July 4th during the presidencyDonald TrumpHe signed what he refers to as “The One Big Beautiful Bill” into law. This is not a correct statement. He also sent out a mass email on July 12 with the same claim.

The Social Security Administration sent a overly enthusiastic and dubious email on July 4 to millions of individuals receiving Social Security benefits and others. Shortly after, I received reports from some retirees who were shocked that a federal agency was aggressively promoting supposed advantages and causing further confusion.

The legislation guarantees that almost90% of Social SecurityBeneficiaries will no longer be required to pay federal income taxes on their benefits, offering significant and immediate assistance to seniors who have dedicated their lives to the country’s economic growth,” Social Security mentioned in its email and online.

Ninety percent, truly? We’ll discuss that more later.

At one time, the email appeared to indicate that retirees were receiving two tax benefits.

“A new law features a clause that removes federal income taxes on Social Security benefits for the majority of recipients, offering support to individuals and couples. Furthermore, it offers a larger deduction for taxpayers who are 65 years or older, helping retirees retain more of their earnings,” according to a copy of the email sent to me.

Furthermore? There is no “furthermore.”

The tax reduction provides an increased deduction for individuals over the age of 65. That’s all. The legislation does not remove the possibility that certain people may still owe taxes on their Social Security income.

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The Social Security blog currently mentions a correction but does not specify what was incorrect.

Update Notice: This blog was revised on July 7, 2025. The second sentence in the fourth paragraph initially stated, ‘Additionally, it offers an improved deduction for taxpayers over the age of 65, allowing retirees to retain more of their earnings.’

The word “additionally” has been removed from the text.

Instead, the section in theonline blog at SSA.govcurrently states: “The new law features a clause that removes federal income taxes on Social Security benefits for the majority of recipients, offering support to individuals and couples. It achieves this by offering a larger deduction for taxpayers who are 65 years or older, allowing retirees to retain more of their earnings.”

Vague as a family member once put it.

What is the ‘senior bonus’ and how does it function?

A temporary “senior bonus” deduction of as much as $6,000 will be available to individuals aged 65 and above in the years 2025, 2026, 2027, and 2028. This benefit will cease after that unless Congress takes action.

Tax experts refer to this as a “special personal exemption” designed to lower the tax burden for numerous older individuals. Typically, seniors with substantial incomes would not be eligible; those with lower incomes who don’t owe taxes would also not gain from it.

“Since it is a deduction and not a refundable credit, it won’t assist seniors who do not currently owe any income taxes,” stated Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting based in Riverwoods, Illinois.

Luscombe stated that older individuals with higher incomes get a reduced tax benefit or none at all, as the deduction begins to decrease for those with a modified adjusted gross income of $75,000 if single and $150,000 if filing jointly.

Certainly, there are many additional rules, but surprisingly, you don’t need to be receiving Social Security payments every month to be eligible.

It won’t be beneficial to be young — regardless of your earnings.

Individuals aged 62, 63, and 64 by the end of a tax year are ineligible for the “senior bonus” deduction. They might still be required to pay income taxes on their Social Security benefits if their earnings meet specific income limits, without receiving any compensating bonus deduction.

Here is an overview of additional guidelines you should be aware of when submitting your 2025 tax return:

• Some couples who are married may secure a better offer:If both partners are 65 years old or older, each may be eligible for a maximum of $6,000 or a combined total of $12,000 for the senior bonus deduction in a specific tax year.
• Couples who are married encounter an additional regulation:Couples who are married are required to file together in order to claim the senior deduction. If you choose “married filing separately,” you will not be eligible for the senior bonus deduction, as stated by Tom O’Saben, an enrolled agent and director of tax content and government relations for the National Association of Tax Professionals.
• Social Security number required: To qualify for the deduction, the senior must possess a valid Social Security number.
• Those with higher incomes face limits:The tax benefit would completely end for single individuals aged 65 and above with a modified adjusted gross income of $175,000. It would also fully expire for married individuals 65 and older with a modified adjusted gross income of $250,000.
• 6% is the rate at which it is being phased out.If your income exceeds the limit, the deduction gradually decreases by 6%.

The National Association of Tax Professionals, with 23,000 members, provided a scenario for a 70-year-old single retiree with a modified adjusted gross income (MAGI) of $90,000.

In this case, $15,000 of MAGI goes beyond the $75,000 limit for an individual taxpayer.

Take out your calculator and multiply $15,000 by 6% to get $900.

The maximum $6,000 deduction for seniors is then lowered by $900 in this case, resulting in a senior deduction of $5,100.

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Taxes related to Social Security have never been removed.

I assure you, you’re not helping your friends by claiming there are no taxes on Social Security benefits. Some individuals still need towithhold income taxes from their Social Security benefitsadvantages, if they have additional major sources of income.

At no time did the House bill or the Senate version, which was eventually approved by the House and enacted into law by Trump, contain a clause to remove the tax on Social Security benefits or offer a deduction for Social Security income, as stated in a summary of the large reconciliation bill from Wolters Kluwer, a provider of information services.

Trump famously proposed Making Social Security benefits tax-exemptDuring his 2024 campaign. However, such a change would not be included in the budget reconciliation process. A section of the Congressional Budget Act of 1974 prevents Senate reconciliation bills from containing any provisions that alter Social Security benefits or taxes.

“It’s reasonable to view this new calculation as an effort to align with the president’s campaign proposal, while adhering to the constraints of the reconciliation process,” stated Garrett Watson, director of policy analysis at the nonpartisan Tax Foundation.

“But characterizing this as excluding Social Security from income tax is not truthful and could mislead or anger seniors who ultimately pay taxes on certain benefits,” Watson stated.

The senior bonus deduction, as Watson highlights, affects any taxable income source that an individual aged 65 or older possesses and might not fully remove taxes on Social Security benefits.

Social Security payments started being subject to federal taxation in 1984 in an effort to strengthen the Social Security trust fund, which was experiencing financial difficulties.

At minimum, the new tax benefit indicates that numerous elderly individuals may reduce their tax payments over the course of four years.

“Although the SSA asserts otherwise, most people would find their income taxes on Social Security benefits lowered, rather than completely removed,” noted Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.

In an online report dated July 9, Gleckman stated that thebiggest beneficiariesSeniors earn approximately $80,000 to $130,000. For this group, the senior bonus deduction would result in an average tax reduction of around $1,100, or roughly 1% of their post-tax income, he mentioned.

The Tax Policy Center estimates suggest that a tax deduction of as much as $6,000 would help less than half of senior citizens.

The amount a senior eligible for the “senior bonus” will save on taxes varies based on their taxable income, which influences their marginal tax rate.

For instance, at a 12% marginal tax rate, a $6,000 deduction for a single individual aged 65 or older would lead to $720 in tax reductions, as stated by Watson.

A 12% tax rate is applied to taxable income for a single filer ranging from $11,926 to $48,475 in 2025. Adjustments for annual inflation may be implemented for the marginal tax brackets.

Hype, intricacies, and additional factors can leave your mind in a whirl.

All of this raises the question: How can Trump claim there will be no taxes applied to Social Security benefits?

Well, retirees should approach this as one of those Trump-like statements, where it might be wise to review the details carefully.

“The president frequently appears to attempt to present an issue in the most favorable light, even if it means not fully aligning with the facts,” Luscombe stated.

The 90% statistic mentioned in the email from the Social Security Administration seems to align with a 90% number cited by the White House. This is deceptive.

Prior to the mega tax bill being enacted on July 4, numerous individuals were not required to pay taxes on their Social Security benefits depending on their income level.

About 40% of peopleIndividuals receiving Social Security benefits currently pay income taxes on those payments, as stated in a prior report released by the Social Security Administration in 2025.

Other projections, however, indicate that slightly over 50% currently pay taxes.

The Tax Foundation did not calculate the share of seniors who would be exempt from taxes on benefits with the new deduction. However, it mentioned that approximately half of all Social Security recipients did not owe federal income tax on their Social Security benefits prior to the new tax legislation.

Gleckman, from the Tax Policy Center, informed the Detroit Free Press — which is part of the USA TODAY Network — that the 90% number utilized by the Social Security Administration does not reflect the actual situation. In his online blog, Gleckman stated that the administration likely arrived at its 90% estimate by “assuming that all tax deductions, including the new senior deduction, are solely used to lower Social Security benefit taxes.”

“But naturally, senior citizens pay taxes on all their taxable earnings, including income from sources beyond Social Security,” Gleckman wrote.

The Tax Policy Center’s projection suggests that roughly half of all recipients will owe some income tax on their Social Security benefits, Gleckman noted. “In other words, they have a greater tax obligation than they would if these benefits weren’t subject to taxation.”

“The Social Security system is intricate, and in numerous aspects, its complexity can be alarming for senior citizens, who often depend on its benefits to cover their living costs during their later years. The most recent SSA message fails to assist and might actually worsen the situation,” Gleckman wrote.

The way Social Security benefits are taxed will continue to be a complicated issue for numerous individuals aged 62 and older.

According to Social Security records,nearly 23% of menand 24.5% of women who applied for retirement benefits in 2022 were 62 years old.

The minimum age at which you can start receiving Social Security retirement benefits is 62. However, if you begin collecting early, your monthly retirement payment will be lower, with a slight reduction for each month before your full retirement date.full retirement age.

The complete retirement age is67Now, for individuals born in 1960 or later. For those born before that, the full retirement age differs and is lower than 67, depending on your birth date.

How are Social Security benefits subject to taxation?

Regrettably, even a small increase in income can result in owing taxes, as the income limits that initiate taxation on Social Security benefits fail to account for inflation.

For individuals filing as single, the limit for owing taxes on as much as 50% of Social Security benefits is reached when your total income falls between $25,000 and $34,000 annually. When your total income exceeds this range, as much as 85% of your benefits could become taxable.

Couples who file a joint tax return may be required to pay taxes on as much as 50% of their Social Security benefits if their total income falls between $32,000 and $44,000. When the couple’s combined income exceeds this range, as much as 85% of their benefits could become taxable.

Total income refers to your adjusted gross income, along with nontaxable interest, like interest from specific types of bonds, plus 50% of the Social Security benefits you received during that year.

Therefore, an individual who is employed while receiving Social Security benefits must consider their job-related income. The same applies to someone who is retired and making taxable distributions from a traditional 401(k) account.

None of this tax complexity is going to disappear.

O’Saben, from the National Association of Tax Professionals, expressed his frustration with how the senior bonus deduction is being promoted. He heard a radio news report suggesting that Social Security benefits are no longer taxable and ended up shouting at the radio while driving.

“No clause exists that makes Social Security benefits tax-exempt,” O’Saben stated.

Contact personal finance writer Susan Tompor:[email protected]. Follow her on X @tompor.

This piece first was published in the Detroit Free Press:Social Security benefit taxes were not removed even if you’ve heard otherwise.