“How can I avoid having my Social Security benefits taxed?” 

That is a question we are regularly asked here at the AMAC Foundation’s Social Security Advisory Service. And the unfortunate answer for many who ask is that “you cannot!”  As the old saying goes, “the only things certain in life are death and taxes.” And while that is surely so, there actually is one circumstance which means you may not have to pay income tax on your Social Security benefits – you must have very low taxable income.

A historical perspective

For background, let’s review the history of taxation of Social Security benefits.  Originally, from the late-1930s inception of the Social Security program, all benefits were received tax free.  And that lasted for over 43 years, to a time when the Social Security program experienced financial difficulties. Those financial difficulties came to a head in about 1982, when Congress finally came to grip with what the Trustees of Social Security had been telling them for years – that Social Security would become unable to pay full benefits starting in 1984. 

As Congress seems historically prone to do, they waited until the last possible moment to fix the problem, which resulted in urgent amendments to the Social Security Act, proposed by a bipartisan Congress and enacted by President Reagan in 1983. These amendments mandated that 50% of received Social Security benefits could be taxable for those with incomes exceeding certain thresholds. The rationale behind the 50% number was that half of each beneficiary’s SS benefits were paid based on their employer’s matching payroll tax (FICA/SECA) contribution, and it was the employer’s portion of SS benefits which were to be taxed (benefits from the individual’s payroll tax contribution was not). The income thresholds were set at $25,000 for single tax filers and $32,000 for couples filing jointly.  This legislative change, along with several others, restored Social Security to a firm financial footing for years.

When taxation of Social Security benefits started in 1984, only about 10% of income tax filers had to pay income tax on their Social Security benefits.  But no provision was included in the legislation to increase the income thresholds for inflation so, as the years passed and as salaries and income regularly rose, more and more people were required to pay income tax on their benefits. Social Security indicates that more than half of retiree households are subject to this income tax levy today.

Then, in 1993, a majority Democratic Congress approved, and President Clinton signed the Omnibus Budget Reconciliation Act which, among other things, included a provision to expand taxation of Social Security benefits for those with incomes over even higher thresholds – $34,000 for individual tax filers and $44,000 for married couples filing jointly. For those who exceeded the new higher income thresholds, up to 85% of their received Social Security benefits would be subject to income tax.  The rationale for the 85% number was that, overall, each beneficiary (according to Congressional logic at the time), on average, would only personally pay for about 15% of the lifetime benefits they would eventually receive, leading that Congress to conclude that if combined income from all sources exceeded the higher threshold ($34,000 for single filers and $44,000 for those filing married/jointly), up to 85% of received Social Security benefits should be taxable. But once again, no provision was ever made to increase these income thresholds for inflation.  Thus, more and more Americans must, each year, pay income tax on their Social Security benefits.  In 2021, about 50% of all Social Security beneficiaries paid income tax on their Social Security benefits (versus 10% in 1983), and that percentage continues to rise as wages and income grows with inflation. And that means that, today, fewer than half of all beneficiaries are exempt from paying income tax on their Social Security benefits. And for those who are not exempt – more than 50% of Social Security beneficiaries – there is no way to avoid paying income tax on their Social Security benefits.

It is useful to fully understand past Congressional thinking for taxation of Social Security benefits. Although one important reason Congress originally enacted taxation of benefits was to improve Social Security’s financial condition, there was yet another, more subtle reason.  And that was to alter the way that SS benefits were viewed to align them more closely with how all other retirement benefits were treated for income tax purposes. Thus, the underlying intent of not raising the SS taxation thresholds was (is) to eventually make more Social Security benefits taxable, just as all other retirement income is subject to income tax as it increases.[1] This intent has obviously continued through more recent Congressional sessions.

How does the IRS determine income for taxing Social Security?

The IRS examines everyone’s reported income each year and uses a factor called “provisional income” to see if the beneficiary must pay income tax on their Social Security benefits.  For income tax purposes, “provisional income” consists of each taxpayer’s Adjusted Gross Income (their “AGI” on their tax return), with certain deductions added back in. The deductions added back into AGI for tax purposes normally include any tax-exempt interest which was claimed on the tax return, plus 50% of the Social Security benefits the taxpayer received during the tax year.  This latter additional amount considers that only the SS benefits attributable to employer contributions are taxed (the SS benefits attributable to the worker’s contribution aren’t taxed).

The taxpayer’s IRS filing status is then used to see if, and how much (if any), of their Social Security benefits are taxable. For a person filing taxes as a single with “provisional income” between $25,000 and $34,000, or a married couple with provisional income between $32,000 and $44,000, half (50%) of the Social Security benefits received during the tax year will become part of their income taxable by the IRS (at whatever their regular IRS tax rate is). People under those first thresholds ($25,000 & $32,000) do not pay income tax on their Social Security benefits. However, those whose provisional income exceeds the higher thresholds ($34,000 and $44,000 respectively) may have up to 85% of their received SS benefits taxed. For reference, income tax on Social Security benefits represented just over $55 billion in Social Security revenue for the year 2024, and over 50% of all Social Security beneficiaries paid income tax on their benefits. The actual dollar amount each beneficiary pays on their received Social Security benefits varies, of course, by their total taxable income and their corresponding IRS tax rate. But suffice to say that taxation of Social Security represents both a significant income for Social Security as well as a significant cost to at least half of all senior citizens on Social Security. 

What about the election promise of “no income tax on Social Security?

Of course, most seniors will recall that during the 2024 election cycle, then-candidate Donald Trump promised to eliminate income tax on Social Security benefits (among several other tax abatement promises).  Thus, when now-President Trump offered what he referred to as “one big, beautiful bill,” the Republican House of Representatives offered H.R. 1 – the One Big Beautiful Bill Act – in the 119th Congress, which was passed by the House on May 22, 2025, in a largely partisan vote.  As a normal part of the legislative process, the proposed House bill then went to the Senate (where it is today) for discussion, possible alteration, and Senate vote, and, after resolution of any Congressional issues and with Senate approval, will then be sent to the President for signature. However, although H.R.1 did include some of the tax abatement which President Trump promised (namely “no tax on tips” and “no tax on overtime pay”), it did not include a provision to completely eliminate income tax on Social Security benefits. What H.R.1 does include in its current form, however, is some income tax relief for senior citizens in the form of a higher Standard Deduction for senior citizens when submitting their income tax returns. Although H.R. 1 is still under Senate review, it appears the intent is to provide a Standard Deduction “bonus” of either $4,000 (House proposal) or $6,000 (current Senate proposal) per individual beginning with the 2025 tax year.

So, why didn’t H.R.1 include eliminating income tax on Social Security benefits?

Why isn’t eliminating income tax on Social Security included in H.R.1?

For one thing, income tax on Social Security contributes over $55 billion in annual revenue to the program, and any change to the Social Security Act should include other changes which offset the resulting loss of income. Also, changes to the Social Security Act cannot be done using the “budget reconciliation” process, which is the process being used for H.R. 1 – the One Big Beautiful Bill Act. In other words, it wasn’t possible to include Social Security taxation changes in the legislation currently making its way through Congress. But that doesn’t mean that it will not, someday, be proposed. It will, however, most likely be included in broader Congressional legislative proposal which restores Social Security to financial solvency – an issue which the program will face in less than 9 years.  According to the most recent (June 2025) report of the Trustees of Social Security, the Social Security Trust Funds will be fully depleted in 2033, unless Congress acts soon to reform the program. And if the SS Trust Funds are depleted, Social Security will (by law) be limited to paying benefits equal to Social Security revenue received, which has been insufficient to pay full benefits for several years.  If the SS Trust Funds are fully depleted, Social Security will only be able to pay about 77% of each beneficiary’s monthly amount.

Have there been other Congressional efforts to eliminate income tax on SS benefits?

In the previous (118th) Congress, several separate legislative bills were introduced to either eliminate or alter the way Social Security benefits were treated for income tax purposes.  Those bills included:

  • the ”Senior Citizens Tax Elimination Act,” which proposed eliminating federal taxation of Social Security benefits
  • the “You Earned It – You Keep It Act,” which proposed eliminating Social Security from being included in Gross Income for tax purposes.
  • H.R. 9359, which proposed changes to the IRS code to exclude Social Security from gross income
  • the “Social Security 2100 Act,” which proposed changes to the thresholds at which Social Security benefits were subject to income tax
  • the “Social Security Check Tax Cut Act,” which proposed providing a temporary (2 year) reduction in the amount of SS benefits subject to income tax.

None of this legislation, however, made it fully through the legislative process and, thus, none were enacted.  This may, perhaps, be attributed to Congressional concerns over the looming broader financial crises facing Social Security early in the next decade – in the year 2033. However, none of these bills addressed the larger problem of program reform to accomplish Social Security solvency.

AMAC’s Social Security Guarantee proposal

The Association of Mature American Citizens (AMAC) recognized Social Security’s looming financial issue some years ago and developed a common-sense plan to restore the program to full solvency.  AMAC’s plan – it’s “Social Security Guarantee” – suggests several structural program changes which improve benefits for some recipients with lower benefits, and changes how benefits are calculated for those with higher incomes, achieving program solvency without substantial increases in the taxes (FICA/SECA) that workers pay into the program.  AMAC has long advocated for the elimination of income tax on received Social Security benefits and continues to do so in their Social Security Guarantee.  The proposal, however, also recognizes that Congress may be reluctant to completely eliminate income tax on SS benefits so, as an alternative, AMAC suggests substantially increasing the thresholds at which Social Security benefits become subject to income tax. If adopted by Congress, only single filers whose provisional income is over $50,000 or married filers whose provisional income exceeds $100,000 would have 50% of their received SS benefits taxed. And only single filers whose provisional income exceeds $75,000 and married filers whose income exceeds $150,000 would have 85% of the Social Security benefits subject to income tax. This would eliminate income tax on Social Security benefits for most American seniors.

AMAC’s Social Security Guarantee is a comprehensive package which not only addresses income tax on Social Security benefits but also addresses the general need to completely reform the Social Security program and restore it to financial solvency.  It is growing increasingly urgent that Congress and the Administration work together to reform Social Security to restore its fiscal health.  And that can be done by, among other things, eliminating or dramatically reducing income tax on Social Security benefits. See a summary of AMAC’s Social Security Guarantee here.

[1] This intent is documented in research by the Library of Congress’ report – CRS product number IF11397.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.