Nearly half of all Social Security beneficiaries will owe federal income tax on part of their benefits in 2026 — 48%, according to the Congressional Budget Office. The trigger is a single number called provisional income, and the dollar lines that decide it have not moved since 1983 and 1993, while benefits rise every year with the cost-of-living adjustment. In 2027, the 3.6% COLA pushes more people over the line. The good news: you can work out in advance, in dollars, whether your benefits will be taxed — and there is one move with a hard December 31 deadline, a Roth conversion, that can change both your tax bill and your Medicare premium two years later.

The one number that decides it: provisional income

Provisional income — the Social Security Administration calls the same figure “combined income” — is the yardstick the IRS uses to decide whether your benefits are taxable. It has three parts:

Provisional income = adjusted gross income + tax-exempt interest + 50% of your Social Security benefits

Adjusted gross income includes pensions, wages, and taxable retirement-account withdrawals. Tax-exempt interest is mostly municipal-bond income — it does not appear on your tax bill, but it counts here. And half of your benefits counts, whatever your filing status.

Two dollar lines, set by law, divide everyone into three tiers:

Filing status	No tax on benefits below	Up to 50% of benefits taxable	Up to 85% of benefits taxable
Single, head of household, or qualifying surviving spouse	$25,000	$25,000 – $34,000	Above $34,000
Married filing jointly	$32,000	$32,000 – $44,000	Above $44,000
Married filing separately, lived with your spouse at any time	$0	—	From the first dollar

Two things people get wrong. First, “up to 85%” is the share of your benefits added to your taxable income — not the tax rate. You pay your ordinary marginal rate on that share, so the tax is far less than 85% of your benefit. Second, the thresholds are not indexed to inflation: Congress set the $25,000 and $32,000 lines in 1983 and added the 85% tier in 1993, and neither has moved since — which is why more retirees are taxed every year.

The size of your benefit matters too, because half of it feeds the formula. When you claim at 62, 67 or 70 changes your monthly amount — and therefore your provisional income — for the rest of your life.

Worked example 1: single, a pension, and the 50% tier

Margaret is 68 and single. Her Social Security benefit is $2,170 a month — the average retired-worker benefit after the 2027 COLA — which is $26,040 a year. She also has a pension of $20,000 a year.

Half of her benefits: 50% × $26,040 = $13,020
Plus her pension: $13,020 + $20,000 = $33,020 provisional income
$33,020 sits between $25,000 and $34,000, so she is in the 50% tier.

How much of her benefit becomes taxable? The smaller of two numbers: 50% of her benefits ($13,020), or 50% of the amount by which her provisional income exceeds $25,000 — that is, 50% × ($33,020 − $25,000) = 50% × $8,020 = $4,010.

So $4,010 of Margaret’s $26,040 benefit is added to her taxable income. At the 12% marginal rate, that costs her about $481 in tax for the year. The other $22,030 of her benefit stays untaxed.

Notice how close to the line she is: if her pension were $11,980 instead of $20,000, her provisional income would be exactly $25,000 and none of her benefit would be taxed.

Worked example 2: a couple in the 85% tier

Robert and Elaine file jointly, each receiving the average $2,170-a-month benefit — $52,080 a year combined — plus $30,000 a year from a pension and IRA withdrawals.

Half of their benefits: 50% × $52,080 = $26,040
Plus other income: $26,040 + $30,000 = $56,040 provisional income
$56,040 is above $44,000, so they are in the 85% tier.

The taxable amount is the smaller of 85% of their benefits ($44,268) or this two-part sum: 85% of the amount above $44,000, plus 50% of the band between $32,000 and $44,000.

85% × ($56,040 − $44,000) = 85% × $12,040 = $10,234
50% × ($44,000 − $32,000) = 50% × $12,000 = $6,000
Total: $10,234 + $6,000 = $16,234

So $16,234 of their $52,080 in benefits is added to their taxable income. At the 22% marginal rate, that is about $3,571 in tax — roughly $297 a month. The 85% figure is a cap, never a rate: even at the highest incomes, 15% of your benefits is always tax-free.

Worked example 3: the average benefit, on its own, is not taxed

Take a single retiree whose only income is Social Security: $2,170 a month, $26,040 a year. Provisional income is half of that — $13,020 — which is well below the $25,000 line. Federal tax on the benefits: $0.

This is the point most people miss. The same $2,170-a-month benefit is completely tax-free for one retiree and 85% taxable for another. The benefit is not what gets taxed — the other income around it is. A pension, a part-time job, or an IRA withdrawal is what pushes you over the line.

Why 2027 catches more people than 2026

Three forces push in the same direction, and all three are already locked in.

The thresholds are frozen.

The $25,000 and $32,000 lines were set in 1983 and the 85% tier added in 1993, and neither has ever been adjusted for inflation. If the first line had kept up, it would now sit near $77,000 for a single filer and about $99,000 for a couple. Instead it is still $25,000.

The 2027 COLA raises benefits — and provisional income with them.

The 3.6% COLA takes the average benefit from $2,095 to $2,170 a month, an extra $900 a year. Half of that, $450 a year, is added to provisional income. For a retiree sitting just below a line, that alone can tip them over. If you have not seen your new amount yet, your COLA notice arrives in your my Social Security account from late November — and you must go paperless by November 18 to see it online first.

The Congressional Budget Office estimates 48% of beneficiaries will pay income tax on part of their benefits in 2026, totalling $120 billion — 7.1% of all benefits paid. The share of benefits paid as tax has roughly tripled since 1994, from 2.2% to 6.2% in 2025.

One number is still missing for 2027: the final Part B premium. CMS has not announced it as of November 12 — the Trustees project $209.50 a month, but that is not final. Our 2027 Part B premium explainer tracks what is known and what is not, and we will update it the hour CMS publishes.

The tax torpedo: when $1 of income costs more than $1 of tax

Here is the part that surprises even careful planners. Inside the 50% band, every extra $1 of income does two things: it is taxed itself, and it pulls $0.50 of your benefits into tax with it. Your effective marginal rate becomes 1.5 times your bracket — 18% instead of 12%.

Inside the 85% band it is worse: each extra $1 pulls $0.85 of benefits into tax, so your effective rate is 1.85 times your bracket — 40.7% instead of 22%.

Take the couple from example 2. If they take one extra $1,000 IRA withdrawal while sitting in the 85% band, $850 more of their benefits becomes taxable. Their taxable income rises by $1,850, and at 22% that costs $407 in tax on a $1,000 withdrawal. That is the “tax torpedo,” and it is why the order and timing of withdrawals matters as much as the amount. Bunching a big withdrawal into a low-income year, or spreading withdrawals to stay below a line, can save real money — but make that call with a tax professional, not as a December guess.

The December 31 move: Roth conversions and the IRMAA cliff

A Roth conversion — moving money from a traditional IRA into a Roth IRA — counts as ordinary income in the year you convert it. That raises your provisional income, which can raise the taxable share of your benefits. But for people on or near Medicare, there is a second bill, and it arrives two years later.

Medicare’s income-related surcharge, IRMAA, is set from your modified adjusted gross income two years earlier. A conversion made in December 2026 sets your 2028 Medicare premiums, not your 2026 bill. And IRMAA is a cliff, not a slope: cross a line by $1 and the full surcharge applies for the whole year.

Worked example, using the published 2026 CMS table as an illustration: a couple with MAGI of $217,000 converts $2,000 from a traditional IRA to a Roth in December 2026. Their MAGI becomes $219,000 — $1,000 over the first IRMAA line for joint filers ($218,000).

Extra Part B surcharge: $81.20 a month per person
Extra Part D surcharge: $14.50 a month per person
Combined: $95.70 a month per person × 12 months × 2 people = $2,296.80 for the year

That $2,296.80 arrives on their 2028 Medicare bills, on top of the income tax on the $2,000 conversion itself. The 2028 IRMAA lines will be somewhat higher than the 2026 ones, so treat the 2026 table as an illustration and plan with a margin below the line you use — not a dollar below it.

Three rules to remember:

The deadline is December 31. A conversion must be completed by year-end, and a completed conversion cannot be undone — recharacterisation ended in 2018.
Age 63 is the warning year. Income in the year you turn 63 sets your premiums when you enrol at 65, so a conversion at 63 or 64 lands exactly when Medicare starts.
A fall in income can be appealed. If you have retired, cut hours or lost a spouse since the tax year Medicare is using, you can ask Social Security to use a more recent year.

If your income is low rather than high, the year-end check runs the other way: Medicare Savings Programs can pay your Part B premium, and it is worth checking before the year ends.

The $6,000 senior deduction: what it does — and does not do

You may have seen headlines saying the new tax law ended taxes on Social Security. It did not. The One Big Beautiful Bill Act, signed July 4, 2025, added a separate deduction of $6,000 per person aged 65 or older, for tax years 2025 through 2028. It phases out by 6 cents for every dollar of modified adjusted gross income above $75,000 for single filers or $150,000 for joint filers.

A single filer aged 65+ with MAGI of $60,000 gets the full $6,000 deduction.
At MAGI of $80,000, the reduction is 6% × ($80,000 − $75,000) = $300, so the deduction is $5,700.
The deduction lowers taxable income. It does not change the $25,000 and $34,000 provisional-income thresholds, and it does not make benefits tax-free.

The White House estimates the deduction lifts the share of seniors who effectively owe nothing on their benefits from about 64% to about 88%. That is real help for many people — but it is a deduction, not a repeal, and the underlying tax on benefits is unchanged.

Do not forget your state

In 2026, eight states still tax some portion of Social Security benefits: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont. Most states do not tax benefits at all, and several of the eight exempt benefits below an income line — check your own state’s rules before assuming the federal answer is the whole answer.

What to do before December 31

Find your Form SSA-1099 (Box 5 shows your net benefits) and work out your provisional income for 2026 using the formula above. The IRS offers a free worksheet in Publication 915.
If you are near a line, model a Roth conversion before December 31 — and check the IRMAA line two years out, not just this year’s tax.
Consider withholding. Form W-4V lets Social Security withhold 7%, 10%, 12% or 22% from your benefits, so a tax bill does not land all at once in April.
If your income is low, check the help programs. Medicare Extra Help can cut Part D costs to a few dollars per prescription, and it is separate from the tax question.
Talk to a tax professional before moving money. This article is education, not tax advice — the right answer depends on your full return, your state, and your Medicare timeline.

The thresholds will not move in 2027. Your benefits will. That is the whole reason to do this maths now, while there is still time to act on it.

Frequently asked questions

Will my Social Security be taxed in 2027?

It depends on your provisional income, not on your benefit alone. If your provisional income — adjusted gross income plus tax-exempt interest plus half your benefits — stays below $25,000 as a single filer or $32,000 filing jointly, none of your benefits are taxed. Above those lines, up to 50% and then up to 85% of your benefits can be added to your taxable income.

What is provisional income?

Provisional income is the number the IRS uses to decide whether your Social Security benefits are taxable. It equals your adjusted gross income, plus any tax-exempt interest such as municipal-bond income, plus exactly half of your Social Security benefits for the year. The Social Security Administration calls the same figure “combined income.”

How much of my Social Security can be taxed — 50% or 85%?

Between $25,000 and $34,000 of provisional income for a single filer ($32,000 to $44,000 filing jointly), up to 50% of your benefits can be included in taxable income. Above $34,000 single or $44,000 joint, up to 85% can be included. Those percentages are the share of benefits added to your income — you pay your ordinary marginal tax rate on that share, so the tax itself is much less than 85% of your benefit.

Does the 3.6% COLA mean I will pay more tax in 2027?

It can. The COLA raises the average benefit from $2,095 to $2,170 a month, an extra $900 a year, and half of that — $450 — is added to your provisional income. If you sit just below a threshold, that alone can tip you into the taxable tier. The thresholds themselves do not rise with the COLA, because they are fixed by statute and have not changed since 1983 and 1993.

If I do a Roth conversion in December 2026, when does it hit my Medicare premium?

In 2028. Medicare sets premiums from your income two years earlier, so a 2026 conversion is priced into 2028. It also counts as ordinary income in 2026, which can raise the taxable share of your benefits that year. And IRMAA is a cliff: crossing a line by $1 triggers the full surcharge — $2,296.80 a year for a couple crossing the first line, on the 2026 table.

Did the new law end taxes on Social Security?

No. The One Big Beautiful Bill Act added a $6,000 deduction per filer aged 65 or older, for tax years 2025 through 2028, phasing out above $75,000 single or $150,000 joint. It did not change the thresholds or make benefits tax-free. The White House estimates it lifts the share of seniors effectively owing nothing from about 64% to about 88%.

Figures checked against IRS Publication 915, the Social Security Administration, the Congressional Budget Office and CMS on November 12, 2026.

Sources

IRS, Publication 915 — Social Security and Equivalent Railroad Retirement Benefits: https://www.irs.gov/publications/p915
Social Security Administration — Benefits Planner: Income Taxes and Your Social Security Benefits: https://www.ssa.gov/benefits/retirement/planner/taxes.html
Congressional Budget Office — The Taxation of Social Security Benefits: https://www.cbo.gov/publication/62719
Congressional Research Service — Social Security Benefit Taxation Highlights: https://www.everycrsreport.com/reports/IF11397.html
Centers for Medicare & Medicaid Services — 2026 Medicare Parts A & B Premiums and Deductibles fact sheet: https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-and-deductibles
Social Security Administration — 2027 COLA fact sheet: https://www.ssa.gov/news/press/factsheets/colafacts2027.pdf

Rana — Editor, Elite Era Trends

Rana is the editor of Elite Era Trends, where he explains Medicare, Social Security and AI news for US readers in plain language — costs, deadlines and plan choices, checked against official sources.