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Key Facts

  • ✓ Social Security tax rules will change in 2026 at the state and federal level.
  • ✓ West Virginia will stop taxing Social Security benefits, leaving seven states that tax benefits.
  • ✓ Older Americans will see expanded federal tax breaks through 2028.
  • ✓ The US provides monthly payments that help 74 million people afford essentials.
  • ✓ Americans may pay taxes on up to 85% of their Social Security payments.

Quick Summary

Social Security tax rules will change in 2026 at the state and federal level. West Virginia will stop taxing Social Security benefits, leaving seven states that tax benefits. Older Americans will also see expanded federal tax breaks through 2028.

Americans on Social Security could see new federal tax breaks in 2026, and some states will stop taxing benefit income. The largest social safety net in the US provides monthly payments that help 74 million people afford essentials. Beneficiaries' final tax bill depends on their state, annual income, and eligibility for deductions.

Federal Tax Rules and Deductions

Social Security income is typically taxed at the national level. Americans may pay taxes on up to 85% of their Social Security payments, depending on household income. However, those who take home less than $25,000 as an individual and $32,000 as a couple do not have their benefits taxed. Need-based Supplemental Social Security is also not subject to tax.

President Donald Trump's One Big Beautiful Bill Act will bring more tax relief to seniors. In the new year, taxpayers 65 and older can claim up to $6,000 in addition to their normal standard deduction. This builds on an existing tax deduction for older adults. The expanded breaks under Trump are set to last through 2028.

This means that older Americans filing their 2025 tax returns can write off as much as $23,750. Joint filers over 65 could claim as much as $46,700.

State-Level Taxation Changes

States are able to set their own Social Security tax rules alongside national requirements. Eight states taxed Social Security income this year, while 41 did not. In 2026, West Virginia will stop taxing benefits. The amount beneficiaries will pay in state-level taxes varies widely depending on local laws and household earnings.

The following states currently tax Social Security benefits, though lower-income retirees are often exempt:

  • Connecticut
  • Minnesota
  • Montana
  • New Mexico
  • Rhode Island
  • Utah
  • Vermont

Colorado also allows some seniors to deduct their federal Social Security taxes from their expected state contribution.

Impact on Beneficiaries

The changes to tax rules will directly impact the 74 million people who rely on Social Security payments. These monthly payments help recipients afford essentials. Americans pay into the program during their working careers, which is also supplemented by the federal government.

With the implementation of the One Big Beautiful Bill Act, seniors will have more disposable income due to the increased deduction limits. The combination of state tax relief in West Virginia and federal deductions provides a financial buffer for many retirees. The expanded breaks are scheduled to last through the 2028 tax year.

Conclusion

As 2026 approaches, Social Security beneficiaries should prepare for adjustments in how their income is taxed. The reduction of states taxing benefits to seven, specifically the departure of West Virginia from that list, marks a significant shift. Furthermore, the federal tax relief provided by the Trump administration's legislation offers substantial savings for seniors through 2028. Understanding these changes is vital for accurate tax planning and financial stability for millions of Americans.