Social Security Benefits and the Enhanced Deduction for Seniors
Social Security benefits remain taxable under the latest tax bill; what does that mean for you?
Are Social Security benefits taxable?
The short answer is yes.
You must pay taxes on up to 85% of your Social Security benefits if you file a:
- Federal tax return as single and your “combined income” exceeds $25,000.
- Joint return, and you and your spouse have “combined income” of more than $32,000.
“Combined income” includes your adjusted gross income, tax-exempt interest income, and one-half of your annual Social Security benefits.
2025 Standard Deductions
Single or Married Filing Separately: $15,750
Head of Household: $23,625
Married Filing Jointly or Qualified Surviving Spouse: $31,500
*Additional standard deduction: $2000 ($3200 on MFJ return)
*The additional standard deduction, enacted in the Tax Reform Act of 1986, applies to individuals over the age of 65 or those who are legally blind.
Enhanced Deduction for Seniors
Beginning in the 2025 tax year, an enhanced deduction of up to $6000 for individuals 65 and over. This deduction is in addition to and separate from the existing additional standard deduction.
The Enhanced Deduction for Seniors is intended to help offset the taxability of Social Security benefits by reducing taxable income. The Enhanced Deduction is currently slated to expire after tax year 2028.
The deduction phases out at 6% past $75,000 income for single filers or $150,000 for married filers.
If you are in the vicinity of the tax or deduction thresholds, it would be to your advantage to meet with your tax preparer prior to making changes that will significantly impact your income, starting to claim Social Security benefits, or receiving a 1st-time Required Minimum Distribution.