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As of the 2026 tax year, eight states tax at least a portion of Social Security benefits: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. West Virginia completed its phase-out of the tax on January 1, 2026, leaving 42 states plus Washington, D.C. that do not tax benefits at all.
Which states still tax benefits
Eight states tax Social Security benefits in 2026, and forty-two states plus the District of Columbia do not. Those eight states are Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont, with West Virginia having completed its phase-out this year and now fully exempting benefits.
That is a shrinking list. Nebraska dropped its tax for 2025, Missouri ended its tax recently, and West Virginia finished its own phase-out on January 1, 2026.
Living in a taxing state does not automatically mean a retiree owes money on their benefits, however. Every one of these eight states applies income-based exemptions or phase-outs, and in several cases the thresholds are high enough that most retirees in that state pay nothing at all.
How each state actually applies its tax
Colorado applies a flat 4.4 percent state tax rate, but residents age 65 and older can deduct all of their federally taxed Social Security income, meaning most older retirees in Colorado pay no state tax on their benefits.
Connecticut only taxes higher earners: Social Security benefits are not taxed at all if adjusted gross income falls under $75,000 for single filers or $100,000 for married couples filing jointly, and for filers above that line no more than 25 percent of benefits become taxable.
Minnesota applies stricter rules than most of these states, though it still protects many lower- and middle-income retirees through its own exemption thresholds.
Montana offers the least generous treatment on this list: taxpayers 65 and older only receive a $5,500 subtraction from federal taxable income, after the state repealed several other deductions, including a partial interest-income deduction for seniors, in recent years.
New Mexico technically taxes benefits, but in practice, most residents never pay. Single filers earning up to $100,000 a year will not have their Social Security benefits taxed at the state level at all.
Rhode Island and Utah both apply income-based phase-outs as well, and Utah specifically expanded its exemption in 2026: recent legislation raised the full-exemption threshold so many retirees are now fully exempt if adjusted income falls under roughly $54,000 for single filers or $90,000 for married couples filing jointly.
Vermont rounds out the list with its own income cutoffs. Single filers under $75,000 and joint filers under $95,000 can deduct their Social Security benefits from taxable income for 2026, with the deduction phasing to $20,000 for filers above those thresholds.
The federal tax comes first, regardless of state
Before any state tax question even arises, most retirees should understand that the federal government taxes Social Security first.
If a retiree’s combined income, meaning adjusted gross income plus nontaxable interest plus half of Social Security benefits, exceeds $25,000 for a single filer or $32,000 for a married couple filing jointly, up to 50 percent of benefits become federally taxable, and above $34,000 or $44,000, up to 85 percent becomes taxable.
State taxation, where it exists, generally builds on top of whatever portion the federal calculation already made taxable, rather than starting from a separate number.
This is why retirees comparing states purely on the “does it tax Social Security” question can end up making the wrong decision. Most of these eight states use income limits, so lower- and middle-income retirees are often fully exempt regardless of which state they live in.
The more useful question is almost never “does my state tax benefits,” but whether a retiree’s actual income falls above or below that state’s specific threshold.
Weighing relocation against the full picture
Retirees sometimes consider moving purely to avoid a state Social Security tax, and the math rarely supports doing so in isolation. Most taxing states exempt middle-income retirees already, and higher property, sales, or overall living costs in a supposedly tax-friendly state can cancel out any Social Security tax savings entirely. A full household budget comparison, not a single tax line, should drive any relocation decision.
It is also worth watching this list for further change. Several of the remaining eight states debated repeal proposals in 2025, meaning this roster may shrink again in coming years.
Retirees in Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, or Vermont should check their state legislature’s session each year rather than assuming today’s rule holds indefinitely.
This state-by-state variation sits within a much larger federal payment infrastructure that determines how and when benefits actually reach a bank account, something we detail in our money movement system article.
Readers concerned about the underlying solvency of the benefits being taxed in the first place should also read our coverage of social security cuts projected for the 2030s, since a state tax question becomes less relevant if the federal benefit itself shrinks.
For a broader view of how 2027 COLA estimate increases interact with these state exemption thresholds, our COLA coverage walks through the annual adjustment separately.
Readers evaluating a move for financial reasons more broadly may also want to understand how Fed rate impact affects mortgage costs and savings yields in a prospective new state, since those factors typically outweigh a Social Security tax exemption on their own.
What retirees should do now
Retirees living in one of the eight taxing states should first calculate their own combined income using the federal formula, then compare it against their specific state’s exemption threshold rather than assuming the worst.
Anyone weighing a retirement relocation should build a full comparison covering income tax, property tax, and cost of living side by side, since Social Security taxation alone rarely justifies a move. Checking a state’s current-year threshold directly, since these numbers are adjusted periodically, is worth doing annually rather than relying on last year’s figures.
Methodology: This article combines Social Security taxation data compiled from state revenue department guidance, Kiplinger’s 2026 state tax survey, and federal combined-income thresholds published by the Social Security Administration. Figures were independently reviewed as of the publication date.
