Will Social Security Taxes Be Eliminated in 2025? Understanding the Impact for La Quinta, CA Residents

by | May 21, 2025 | tax preparation

As of May 2025, the federal taxation of Social Security benefits remains unchanged. While several legislative proposals have been introduced to eliminate or reduce these taxes, none have been enacted into law. Therefore, Social Security benefits may still be subject to federal income tax, depending on your combined income.

Federal Taxation of Social Security Benefits

Currently, the federal government taxes Social Security benefits based on your “combined income,” which includes your adjusted gross income, non-taxable interest, and half of your Social Security benefits. Depending on your filing status and combined income, up to 85% of your Social Security benefits may be taxable.

Proposed Legislative Changes

Several bills have been proposed to eliminate or reduce federal taxes on Social Security benefits:

  • You Earned It, You Keep It Act: This bill aims to eliminate federal taxes on Social Security benefits starting in 2025. However, it has not yet passed into law.

  • No Tax on Social Security Act (H.R. 904): Introduced in January 2025, this bill proposes repealing the inclusion of Social Security benefits in gross income. It is currently under consideration in the House Committee on Ways and Means.

While these proposals reflect a legislative interest in reducing the tax burden on Social Security recipients, their future remains uncertain.

State Taxation in California

For residents of La Quinta, CA, it’s important to note that California does not tax Social Security benefits, regardless of your income level. This policy provides a favorable tax environment for retirees relying on Social Security income.

Impact on La Quinta Residents

If federal legislation to eliminate taxes on Social Security benefits is enacted, residents of La Quinta would benefit by retaining more of their Social Security income, as California already exempts these benefits from state taxation.

However, until such federal changes occur, it’s advisable for residents to consult with a tax professional to understand their current tax obligations and plan accordingly.