With 2026 Tax As the season gets underway, some Social Security recipients whose benefits increased in 2025 under the Social Security Equity Act will have to pay more in taxes than they did in 2025. With Medicare premiums increasing and COLAs increasing less than 3% this year, this adds to the financial burden.
President Passes Social Security Equity Act Joe Biden On January 5, 2025, a rule was enacted to reduce or eliminate Social Security benefits for many public employees. Millions of retirees now get fairer, higher Social Security checks. However, experts warn that much of the increased benefits will be taxed.
There is still some breathing room, for under the rule of “One” big beautiful billwhich provides a Social Security tax deduction of $6,000 ($12,000 for couples). However, this would still require taxes on nearly 85% of total Social Security benefits, according to CNBC.
Will recipients need to pay more Social Security taxes this year?
Yes, after passage of the Social Security Equity Act, most beneficiaries who see an increase in their Social Security benefit amount in 2025 will have a higher tax liability in 2026 than in 2025. Therefore, their tax refund will be smaller in 2026, even if their income source remains the same. It is worth noting that this is the first tax filing season since the passage of the 2025 Act.
Experts reveal hack to ‘reduce’ SSA taxes
One-time Social Security payments issued under the Social Security Equity Act are considered taxable Social Security benefits in the year received and are reported on Form SSA-1099, which is also sent to IRS. By default, the full amount is included in that year’s income, which can increase the beneficiary’s tax bill, especially if the payments cover benefits in earlier years.
Also read: IRS “Where’s My Refund?” Tool: How It Works and When You Can Check Your Refund Status
Lawrence Pon of Pon & Associates in Redwood City, Calif., told CNBC that in order to “reduce” taxes, beneficiaries can select a “one-time election” on Form 1040 or 1040-SR. This option allows them to recalculate their taxable payment amounts for prior years to which they apply and report only the remaining taxable portion for the current year. No amendments to past tax returns are required to use an election.
What to know about Social Security Equity Act benefits
The January 2025 bill enables more than 2.8 million people to receive Social Security benefits. That includes state teachers, firefighters and police officers, as well as federal employees covered by the Civil Service Retirement System, and workers covered by foreign Social Security systems, the Social Security Administration (SSA) said.
The SSA website says benefits for these beneficiaries increased by up to $1,000, but in some cases the amount was limited to a “trivial amount.”
