While there is no change on how social security is taxed, there is a new deduction for seniors that will lower overall taxable income.
Firstly, earned income is still subject to social security taxes no matter your age or if you are receiving social security benefits.
Secondly, it still holds true that 50% to 85% of social security benefits are subject to income tax if your combined income ( including wages, pensions, interest, dividends, and capital gains) is between $25,000 and $44,000.
What has changed is that after taxable income is calculated, there will be a new deduction of $6,000 (or $12,000 for married) that reduces how much overall income will be subject to income taxes.
Below is a summary from the IRS newsroom:
Deduction for Seniors
- New deduction: Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law.
- The $6,000 senior deduction is per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify).
- Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
- Qualifying taxpayers: To qualify for the additional deduction, a taxpayer must attain age 65 on or before the last day of the taxable year.
- Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
- Taxpayers must:
- include the Social Security Number of the qualifying individual(s) on the return, and
- file jointly if married, to claim the deduction.
