When are your client’s Social Security benefits taxable?

The enhanced deduction for seniors has revived an old client question: “Does this mean my Social Security is no longer taxable?” For 2026 returns, the answer is no. The temporary deduction may reduce taxable income for eligible taxpayers age 65 or older, but it does not change how Social Security benefits are tested for taxability.

Section 86 still controls the calculation. The tax pro’s question is straightforward: Does the client’s combined income cross the threshold for the filing status? That answer determines whether the benefits remain tax-free or whether up to 50% or 85% must be included in income.

The benefits are only half the equation

Social Security retirement, survivor and disability benefits, as well as the Social Security equivalent portion of Tier 1 railroad retirement benefits, may be taxable. Supplemental Security Income (SSI) payments are not taxable.

Box 5 of Form SSA-1099, Social Security Benefit Statement, shows the client’s net benefits, but the rest of the return determines whether those benefits are taxable.

First, calculate the client’s combined income:

½ of Social Security benefits

Other taxable income

Tax-exempt interest

= Combined income

Certain excluded amounts may also need to be added back. Review the worksheet in Publication 915, Social Security and Equivalent Railroad Retirement Benefits, when the client has foreign earned income or another adjustment included in the combined-income calculation.

Cross the threshold and benefits enter the tax picture

For single, head of household (HOH) and qualifying surviving spouse (QSS) filers, the base amount is $25,000 and the adjusted base amount is $34,000. For married couples filing jointly (MFJ), the amounts are $32,000 and $44,000. See the chart below for married filing separately (MFS) amounts.

If combined income does not exceed the applicable base amount, the client’s Social Security benefits generally are not taxable. Combined income above the first threshold may cause up to 50% of the benefits to become taxable. Above the second threshold, up to 85% may be taxable.

Those percentages are the maximum portions of the benefits included in income, not tax rates. A client with 85% of the benefits included in income is not paying an 85% tax rate on those benefits.

More income can pull more benefits into the tax picture

IRA distributions, wages, pensions, interest, dividends and capital gains can push combined income across a threshold. Tax-exempt interest also counts. A modest income event can therefore increase both the client’s other taxable income and the taxable portion of Social Security benefits.

Before the client takes an IRA distribution, completes a Roth conversion or realizes an investment gain, show how the additional income could pull more Social Security benefits into taxable income.

Do not let the enhanced deduction blur the Social Security calculation. For 2025 through 2028, an eligible taxpayer age 65 or older may claim an additional deduction of up to $6,000 per person, subject to income phaseouts. The deduction may reduce taxable income, but it does not change §86 or the combined-income thresholds.

See the Social Security taxability domino effect

Consider Pat and Robin, a married couple filing jointly. They receive $28,000 of Social Security benefits and $24,000 of pension income.

Their combined income is:

Because $38,000 falls between the $32,000 and $44,000 married-filing-jointly thresholds, $3,000 of their benefits is taxable. That is 50% of the $6,000 by which their combined income exceeds the $32,000 base amount.

Now suppose they take an additional $10,000 IRA distribution. Their combined income rises to $48,000, crossing the $44,000 adjusted base amount. Under the Publication 915 calculation, $9,400 of their Social Security benefits becomes taxable.

The $10,000 distribution increased their taxable Social Security by $6,400. It did not subject the benefits to an 85% tax rate. It pulled a larger portion of the Social Security benefits into taxable income, which will be taxed at their applicable rate after the standard deduction or itemized deduction is applied.

Give the return one last Social Security check

Before closing the file, confirm:

• Did the client receive every Form SSA-1099 or Form RRB-1099, Payments by the Railroad Retirement Board?
• Is the net benefit amount correct after repayments?
• Were tax-exempt interest and any required adjustments included in combined income?
• Does the filing status change the applicable threshold?
• Could different income timing or withholding prevent a surprise next year?

When Social Security is on the return, do not stop at Box 5. Follow the income before calling the benefits tax-free or taxable. These questions can help your clients determine their next financial move to lower next year’s tax liability.