The 2025 Social Security Benefits Worksheet (used to calculate the taxable portion of Social Security benefits on Form 1040) has not changed in its core structure.
The taxability of your Social Security is based on your "provisional income," which is a different calculation than MAGI. It's your Adjusted Gross Income (AGI) plus non-taxable interest plus half of your Social Security benefits.
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Taxation Thresholds:
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Single: Provisional income between $25,000 and $34,000 means up to 50% of your benefits are taxed. Above $34,000, up to 85% is taxed.
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Joint: Provisional income between $32,000 and $44,000 means up to 50% of your benefits are taxed. Above $44,000, up to 85% is taxed.
The new senior deduction reduces your AGI, which in turn lowers your provisional income. This pushes many people below the thresholds where their Social Security benefits become taxable. The IRS will likely update the Form 1040-SR and the Social Security Benefits Worksheet included in its instructions to account for this new deduction.
TurboTax has a Tax Reform calculator which will be updated soon for various scenarios.
@IY Hope this helps!! Thanks again for attending the event!!
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