Will changes to the standard deduction in 2026 alter whether retirees must pay taxes on Social Security?
Executive summary
Changes to the standard deduction for 2026 raise the single standard deduction to $16,100 and joint to $32,200, and the One Big Beautiful Bill also created an extra standard deduction for taxpayers 65+ that can be up to $6,000—both moves expand the amount of income retirees can shield from tax (IRS; Business Insider; NerdWallet) [1] [2] [3]. Available reporting shows these changes will reduce how many seniors owe federal income tax on Social Security benefits but do not unambiguously eliminate taxation of benefits for all retirees; some analysts and state actions point to larger effects in specific places [4] [5] [6].
1. Bigger standard deductions: a straightforward federal shield
The IRS set higher standard deductions for tax year 2026 — $16,100 for single filers and $32,200 for married filing jointly — which mechanically increases the income retirees can exclude before federal tax applies [1]. The One Big Beautiful Bill (OBBBA) also created or expanded an age‑65+ additional standard deduction (described in coverage as up to $6,000 for eligible taxpayers), meaning many beneficiaries will have more deductions to offset the income used in Social Security taxation formulas [2] [7] [3].
2. How federal Social Security taxation works — dollar thresholds still matter
Federal tax on Social Security is triggered by "combined income" thresholds: under prior rules, single taxpayers with combined income under $25,000 and joint filers under $32,000 generally face no taxation of benefits; above those marks, up to 50% or 85% of benefits can be taxable depending on income ranges [4] [8]. The new larger standard deductions and the senior bonus deduction lower taxable income for many retirees and therefore reduce the share whose combined income rises above those thresholds [4] [8].
3. Analysts: bigger deduction narrows the tax net but does not abolish benefit taxes
Policy analysts and tax commentators note the senior deduction will increase the share of seniors who won't pay tax on Social Security — the White House Council of Economic Advisors estimated a jump from 64% to 88% exempt under one projection — but that is a projection tied to the specific design of the deduction and income distributions, not a legal repeal of Social Security taxation [5] [4]. The Tax Foundation and other analysts compare the senior deduction to proposals to fully exempt Social Security and stress the deduction is a targeted relief, not blanket exemption [4] [9].
4. States complicate the picture; some move to exempt Social Security entirely
Federal changes operate alongside state tax rules. Some states, like West Virginia per reporting, are phasing out or eliminating state income tax on Social Security benefits — for example, reporting says West Virginia plans complete exemption for 2026 — which can compound federal relief for residents there [5]. Michigan’s guidance shows state-level policy choices (Public Act 24) can change how Social Security and the standard deduction interact for retirees in that state [6].
5. Who still pays tax on benefits—and why standard deduction changes won’t end all taxation
Retirees with higher non‑Social‑Security income (pensions, IRAs, wages, investment income) can still push combined income above the taxable thresholds even after larger standard deductions; the tax code phases in taxation up to 85% of benefits for higher incomes [8] [4]. Moreover, the payroll tax and wage‑base changes (Social Security wage base rising to $184,500 in 2026) are separate issues affecting workers’ payroll contributions and do not alter benefit‑taxation thresholds for retirees [10] [11].
6. Practical effect for 2026 returns: fewer seniors taxed on benefits, not zero taxation
Multiple outlets covering the 2026 changes conclude the net effect is more seniors will fall below the federal taxable‑benefit thresholds because of the larger standard deduction and the senior bonus deduction; CNBC and other outlets report a substantial increase in the share of beneficiaries who will avoid taxation of Social Security [8] [5]. That said, available reporting does not assert a universal end to federal taxation of Social Security benefits — only targeted relief that reduces the number of taxpayers affected [4].
7. What reporters and analysts disagree about — scale and permanence
Sources concur the deduction reduces tax exposure, but disagree on scale and permanence: proponents argue the deduction meaningfully expands exemptions for lower‑ and middle‑income seniors [2] [7]; some analysts and policy groups caution the measure is smaller than proposals to fully exempt benefits and that its impact depends on other income streams and state rules [4] [9]. Available sources do not mention a federal law that completely eliminates taxation of Social Security for all beneficiaries in 2026 (not found in current reporting).
8. Bottom line for retirees and planners
If you are a retiree, expect the larger 2026 standard deduction and the additional senior deduction to lower your taxable income and increase the chance Social Security benefits are untaxed at the federal level — but calculate using your full mix of income because those with substantial retirement account withdrawals, wages, or investment income can still trigger taxation up to 85% of benefits [1] [8] [4]. For state‑by‑state outcomes, consult state guidance—some states are moving to fully exempt benefits while others retain their rules [6] [5].