The Biggest Social Security "Change" of the Year Didn't Actually Happen

You're probably used to the cost-of-living adjustment (COLA) announcement in October being the biggest Social Security news of the year. But 2025 hasn't been your typical year. The program has already seen a lot of huge changes this year from increased benefits for some under the Social Security Fairness Act to an end to paper checks after 85 years.

But the biggest Social Security change the White House has laid claim to didn't actually happen at all. And it's important to understand what's what before you file your 2025 taxes.

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There are still Social Security benefit taxes

President Trump made a campaign promise to end Social Security benefit taxes on seniors, and he claims to have delivered on that promise with his "big, beautiful bill." But in actuality, Social Security benefit taxes are still on the books, and they look exactly the same as they have for the past 30 years.

Specifically, you could pay federal income taxes on up to 85% of your benefits if your provisional income exceeds certain thresholds for your marital status. Your provisional income is your adjusted gross income (AGI) plus nontaxable interest from municipal bonds and half your annual Social Security benefit. It breaks down like this:

Data source: Social Security Administration.

These taxation thresholds aren't indexed to inflation, so as average benefits and living expenses increase, more and more people find themselves owing them. However, the "big, beautiful bill" did make a change that could give people a little more breathing room this year.

The new senior deduction could temporarily reduce or eliminate your tax bill

There's a new senior tax deduction for those 65 and older worth up to $6,000 for single adults and up to $12,000 for individuals set to take effect this year. Tax deductions reduce your taxable income. So, for example, if your annual income was $60,000 and you qualified for $12,000 in tax deductions, you'd only owe taxes on the remaining $48,000.

This will save the average senior about $670 in after-tax income, assuming you earn less than $75,000 if you're single or $150,000 if you're married. Those with higher incomes will not be able to claim the full $6,000 or $12,000 deduction. However, they may still get a portion of it and they can claim the senior deduction that was in place before the "big, beautiful bill" passed.

Right now, this new deduction is only supposed to last through 2028, though it could get extended. But either way, it may not be enough to help you avoid Social Security benefit taxes forever. Inflation will continue to drive up costs, forcing you to spend more, and that could put you in range of benefit taxation again before long.

This doesn't necessarily mean you'd get a tax bill at the end of the year. It could or you might just get a smaller refund than you were expecting. If you're worried about how much Social Security benefit taxes could cost you, reach out to an accountant who can give you personalized advice on how much you might owe.

You can also contact the Social Security Administration to request that it withhold benefit taxes from you in future years. If it withholds too much, it will pay you the rest back as part of your tax refund.

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