How to Maximize Your 2026 Tax Refund If You Live on Social Security

• Retirees can receive tax refunds even if Social Security is their only income
• New law expands deductions for seniors in 2026
• Filing a tax return can recover money withheld unnecessarily

One of the most common mistakes among older adults is assuming that filing taxes is pointless if they only receive Social Security. In practice, this belief causes many people to miss out on legitimate tax refunds.

The Internal Revenue Service explains that anyone who paid more taxes than they owed is entitled to get that money back, regardless of the source of income.

In other words, if there were withholdings, advance payments, or automatic deductions, there may be a refund waiting.

Before continuing: What is a refund and what is a deduction?

• Tax refund:
  A refund occurs when the IRS determines that a person paid more taxes than required. The money is returned by check or direct deposit.
• Deduction:
  A deduction reduces the income on which taxes are calculated. It is not direct cash, but it can lower the final tax bill enough to generate a larger refund.

This distinction is key to understanding the 2026 changes.

Why Social Security does not exclude you from a 2026 tax refund

Although Social Security benefits are not always taxable, in some cases a portion of them is subject to tax, depending on total household income.

Additionally, many retirees request voluntary tax withholding “just in case,” without knowing whether it is actually required. This often leads to overpayment and, later, a refund.

The Social Security Administration clarifies that Social Security is federal income, but the final tax outcome depends on each individual situation.

That is where deductions become crucial.

The new key deduction under the OBBB law

The One Big Beautiful Bill (OBBB), in effect for tax years 2025–2028, created an additional deduction exclusively for seniors:

• $6,000 extra for individuals age 65 or older filing as single
• $12,000 for married couples filing jointly if both qualify

This deduction:

• Is added on top of the standard deduction
• Applies fully to moderate incomes
• Phases out gradually at higher income levels

For most retirees living only on Social Security, it applies in full.

Real example: How a deduction becomes a refund

Case 1: Single retiree

• Age: 70
• Annual Social Security income: $22,000
• Taxes withheld during the year: $1,200

Without the OBBB deduction

• Taxable income exists
• Calculated tax: $900
• Refund: $300

With the $6,000 senior deduction

• Taxable income reduced to zero
• Final tax: $0
• Full refund: $1,200

The deduction does not give cash directly, but it eliminates the tax, allowing all withheld money to be recovered.

Case 2: Retired couple

• Both spouses over 65
• Combined Social Security income: $34,000
• Total withholdings: $1,800

With the $12,000 additional deduction, the tax liability can disappear entirely, resulting in a full refund of $1,800.

Practical tips to increase your 2026 tax refund

• File a tax return even if you think you are not required to
• Check whether you requested unnecessary withholding
• Keep records of medical expenses and health insurance premiums
• Verify whether your state offers extra senior deductions
• Update your information if your income dropped from last year
• Do not assume retirement means zero refund

Mistakes that continue to cost money

• Not filing due to misinformation
• Ignoring the new age-based deduction
• Assuming Social Security is never taxable
• Failing to review changes in tax law

You may also like: Social Security Moves Up February SSI Payment: What You Need to Know

Getting informed today can mean a refund tomorrow

Living solely on Social Security does not exclude you from receiving a refund.

With the new OBBB deduction and a correctly filed return, many retirees can recover money they are currently losing.

In the 2026 tax season, being informed may be the difference between receiving nothing—or receiving a meaningful refund that truly helps.