Is Social Security Taxed in 2026? What Seniors Need to Know
Yes, Social Security benefits are still subject to federal income tax in 2026. Despite widespread interest in making benefits tax-free, the One Big Beautiful Bill Act (OBBBA) did not change the taxation formula. Up to 85% of your Social Security benefits can be included in taxable income, depending on your total income level. However, the new $6,000 senior bonus deduction can indirectly reduce the taxable portion for some retirees by lowering adjusted gross income.
Is Social Security taxed in 2026?
Social Security benefits have been partially taxable since 1984, when Congress added IRC Section 86 to the Internal Revenue Code. The law creates a two-tier system: depending on your "provisional income," either 0%, up to 50%, or up to 85% of your benefits are included in taxable income.
This has not changed for 2026. Despite public discussion about eliminating the tax on Social Security, the OBBBA addressed senior tax relief through a different mechanism (the $6,000 above-the-line deduction) rather than modifying the Section 86 formula.
About 40% of Social Security recipients pay federal income tax on some portion of their benefits. Whether you owe tax depends on your total income from all sources, not just your benefit amount.
How provisional income works
The IRS uses a measure called "provisional income" (also called "combined income" by the Social Security Administration) to determine how much of your benefits are taxable. The formula is:
Provisional income formula
Adjusted Gross Income (excluding SS)
+ Tax-exempt interest income
+ One-half of Social Security benefits
= Provisional income
Note that tax-exempt interest (such as municipal bond interest) is included even though it is otherwise excluded from your tax return. This catches income that would otherwise be invisible to the taxability calculation.
The IRC Section 86 thresholds
IRC Section 86 establishes two statutory thresholds that determine the taxable percentage of benefits. These thresholds were set when the law was enacted and have never been indexed for inflation. As a result, more retirees have become subject to Social Security taxation over time as nominal incomes have risen while the thresholds remain fixed.
The two tiers work as follows:
- First tier: If provisional income exceeds the lower threshold, up to 50% of benefits may be taxable.
- Second tier: If provisional income exceeds the higher threshold, up to 85% of benefits may be taxable.
The actual calculation involves a worksheet (found in IRS Publication 915 and the Form 1040 instructions) that determines the exact dollar amount of taxable benefits. It is not simply "50% or 85% of your total benefits." The taxable amount is the lesser of (a) the formula result and (b) the applicable percentage of your total benefits. Many retirees with modest income above the thresholds find that less than the full 50% or 85% is actually taxable.
Did the OBBBA change SS taxation?
No. The OBBBA (One Big Beautiful Bill Act), signed into law in 2025, did not modify IRC Section 86 or the provisional income thresholds. Several standalone bills proposing to reduce or eliminate Social Security taxation were introduced in the 118th and 119th Congresses, but none were included in the final OBBBA legislation.
What the OBBBA did provide for seniors is the $6,000 senior bonus deduction, which is an above-the-line deduction available to taxpayers age 65 and older. This deduction reduces AGI, which has an indirect effect on Social Security taxation for some filers.
How the senior bonus deduction can help
Because the $6,000 senior bonus deduction is above the line, it reduces AGI. Since provisional income includes AGI as a component, a lower AGI means lower provisional income. For retirees whose provisional income is near the IRC Section 86 thresholds, this reduction can decrease the taxable portion of their Social Security benefits.
The effect is most meaningful for retirees in a specific income range. If your provisional income is well above the upper threshold, the $6,000 reduction will not change the 85% inclusion rate. If your provisional income is well below the lower threshold, your benefits are already untaxed. The deduction makes the biggest difference for retirees near the boundary between tiers.
The senior bonus deduction phases out at higher income levels (beginning at $75,000 MAGI for single filers and $150,000 for MFJ). See our senior bonus deduction calculator to model the interaction between the deduction and your Social Security benefits.
Note that the standard deduction ($16,100 single, $32,200 MFJ) and the additional standard deduction for age 65+ ($2,050 single, $1,650 per spouse married) do not reduce AGI. They reduce taxable income below the AGI line and therefore have no effect on the Social Security taxation calculation.
State-level considerations
The discussion above covers federal income tax only. At the state level, the treatment of Social Security varies significantly:
- States with no income tax (such as Florida, Texas, Nevada, and Washington) do not tax Social Security.
- Most states with an income tax either fully exempt Social Security or follow the federal inclusion with additional state-level exemptions.
- A small number of states tax Social Security with their own threshold calculations that differ from the federal rules.
Check your state's specific rules before assuming your benefits are fully exempt at the state level. The interaction between state conformity and the OBBBA deductions varies by state.
For a broader look at senior tax benefits, see our posts on three tax deductions for seniors in 2026 and the MAGI glossary entry for details on how modified adjusted gross income is calculated.