Will You Pay Taxes on Social Security in 2025? Here’s the Latest Update

If you’re retired or nearing retirement, you’ve probably heard some buzz about the possibility of Social Security benefits becoming tax-free in 2025. While there’s no official change yet, discussions are heating up in Washington, and several proposals are on the table. Let’s break down what you need to know and what could be coming your way.

How Are Social Security Benefits Taxed Now?

Currently, the IRS taxes Social Security benefits based on your combined income, which includes your adjusted gross income, nontaxable interest, and half of your Social Security benefits. The percentage of your benefits that are taxable depends on how much you make:

• If you file taxes as a single person:
  • Less than $25,000 per year = No taxes on benefits
  • $25,000 to $34,000 per year = Up to 50% of your benefits are taxable
  • More than $34,000 per year = Up to 85% of your benefits are taxable
• If you’re married and file jointly:
  • Less than $32,000 per year = No taxes
  • $32,000 to $44,000 per year = Up to 50% of your benefits are taxable
  • More than $44,000 per year = Up to 85% of your benefits are taxable

These income thresholds haven’t changed in years, which means more retirees are seeing their benefits taxed as retirement incomes slowly increase.

What’s Being Proposed?

There are a few proposals on the table that could give retirees some relief:

1. Trump’s Proposal: Former President Donald Trump recently urged Congress to eliminate federal taxes on Social Security benefits as part of a larger budget bill. He argues that retirees shouldn’t be taxed twice—once when they paid into the system and again when they receive benefits. But whether Congress will approve it remains uncertain, given concerns over the federal budget.
2. The “You Earned It, You Keep It Act”: This bill, introduced in Congress, aims to eliminate federal taxes on Social Security benefits starting this year. To cover the lost revenue, the plan would impose higher taxes on wealthy individuals. Supporters say it’s a fair trade-off, but the proposal is facing some pushback from lawmakers worried about the financial impact.

Will My State Still Tax My Social Security?

Even if federal taxes are eliminated, you might still be taxed by your state. Some states, like West Virginia, are phasing out their tax on Social Security benefits and plan to fully eliminate it by 2026. Colorado has already expanded exemptions to include more retirees under certain income levels.

But not all states are on board—there are still nine states that tax Social Security benefits, so you’ll need to check the rules where you live.

What Does This Mean for Retirees in 2025?

For now, Social Security benefits are still subject to federal taxes, and you should plan accordingly. However, the growing momentum behind these proposals could lead to changes in the future. If you’re worried about how taxes are affecting your retirement income, it may be a good time to speak with a financial advisor.

They can help you explore options like delaying benefits, adjusting your withdrawal strategies, or taking advantage of deductions to reduce your overall tax burden.