Core Points - Social Security benefits may be taxable at both federal and state levels, with up to 85% of benefits potentially counted as taxable income based on income and filing status [1][2] - The One Big Beautiful Bill Act introduces a new standard deduction for 2025, which could lower tax bills or increase refunds for many Social Security recipients [1][10] Taxation of Social Security Benefits - Approximately half of Social Security recipients are required to pay federal taxes on their benefits, with tax rates and brackets remaining unchanged since 1993 [2] - Provisional income, which determines the taxable portion of Social Security benefits, includes adjusted gross income, nontaxable interest income, and half of the Social Security income [3][4] - For a single filer receiving the average Social Security benefit of $2,071 per month, the combined income could reach $32,426, leading to up to 85% of benefits being taxable [5][6] State Taxes on Social Security - Most states either exempt Social Security income from taxes or do not impose a state income tax, but some states may tax a portion of Social Security benefits [8][9] - States like Connecticut tax Social Security only if the adjusted gross income exceeds certain thresholds, with partial exemptions available for higher incomes [9] Changes in Tax Deductions - The One Big Beautiful Bill Act provides an extra standard deduction for seniors, which may reduce tax liability for many beneficiaries [10][11] - The deduction phases out for higher income levels, with specific thresholds for single and joint filers [13] Tax Planning Strategies - Tax planning is crucial for retirees, with strategies including prioritizing Roth accounts and delaying Social Security benefits to minimize tax liabilities [17][18] - By drawing down other assets early in retirement, retirees can potentially increase their future Social Security benefits and reduce taxable income [20][21] Filing Taxes as a Social Security Recipient - Social Security recipients should receive tax form SSA-1099, which details total benefits for the tax year [21] - Generally, individuals need to file a tax return if their taxable income exceeds the standard deduction for their age and filing status [22] - Most individuals whose only income is Social Security and who receive less than $50,000 annually may not need to file a tax return [23][27]