Will the irs still tax ss benefits for retired seniors in 2026?
Executive summary
Yes — Social Security benefits can still be federally taxable for retired seniors in tax year 2026, but changes enacted in 2025 and state-level rollbacks mean many retirees will face reduced or no federal/state tax on some or all benefits; a full federal repeal was proposed but was not law as of early 2026 [1] [2] [3].
1. The baseline rule that still governs who pays federal tax on benefits
Under the long-standing “combined income” test, Social Security retirement, disability and survivor benefits remain potentially taxable: the IRS can treat up to 85% of benefits as taxable income depending on adjusted gross income plus half of Social Security benefits and other items — the framework that determines who pays federal tax on benefits remains in place for 2026 unless Congress enacts a change [1] [2].
2. What changed in law in 2025 that affects 2026 returns
The One, Big, Beautiful Bill Act (OBBBA), enacted in 2025, created tax provisions and deductions for seniors that affect Social Security taxation for tax years beginning in 2025 and through 2028, meaning taxpayers filing for 2026 can claim new deductions and brackets that may lower or eliminate federal tax on benefits for many recipients [3] [4] [2].
3. Pending proposals that would have gone further — and their status
A separate proposal often called the “You Earned It, You Keep It Act” had been floated to eliminate federal taxes on Social Security beginning with 2026 tax returns, but reporting and tax advisers state that as of early 2026 that measure remained pending and was not yet law — so its potential full repeal of federal taxation had not taken effect [1].
4. How much of benefits can be taxed and practical choices for retirees
Even before these recent changes, the system could tax up to 85% of benefits for higher‑income retirees under the combined income formula; retirees can manage timing and sources of withdrawals (Roth conversions, delaying benefits) to reduce AGI and lower taxable portions of Social Security, a strategy financial advisers published in 2025–2026 recommend [1] [5].
5. State-level shifts that change the practical tax burden in 2026
Separately from federal law, several states have been phasing out taxes on Social Security, and reporting shows West Virginia in particular planned to stop taxing benefits in 2026 and other states have expanded exemptions for 2026, meaning many retirees will see lower overall tax bills even if federal rules still permit taxation [6] [7] [5].
6. Administrative guidance and IRS materials to watch
The IRS and SSA have issued guidance and publications relevant to 2026 filing — including IRS notices and SSA summaries of provisions that affect taxable treatment and solvency analyses — and taxpayers should consult IRS publications (e.g., Notice 703, Publication 915 and SSA summaries) for the precise computation and any new withholding tables for 2026 returns [8] [9] [4].
7. The political and fiscal trade-offs behind the headlines
Advocates for full repeal framed it as returning retirement earnings to beneficiaries, while opponents and some lawmakers argued repeal would require offsetting revenue such as raising the Social Security payroll tax cap — a trade-off explicitly discussed in reporting on congressional proposals [6]. That political debate explains why proposals to eliminate federal tax on benefits can gain headlines without becoming immediate law [1] [6].
Conclusion: direct answer
For tax year 2026, the federal government still has the legal authority to tax Social Security benefits under the combined-income formulas (so many retirees will remain potentially taxable), but the 2025 law (OBBBA) introduced deductions and adjustments that will reduce the number of beneficiaries who actually owe federal tax on benefits for 2026 returns; a full federal repeal had been proposed but was not enacted as of early 2026 [1] [3] [2].