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.

2026 Social Security tax refund – PHOTO: Shutterstock

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.

2026 Social Security tax refund – PHOTO: Shutterstock

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

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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.