For over 70 million Americans, that monthly Social Security deposit is their main income. Whether it’s for retirement, a disability benefit (SSDI), or essential income through SSI, this money is the core of the monthly budget for a vast portion of the country’s seniors and vulnerable individuals.
It pays for groceries, utilities, medications, and rent. So, when we talk about any reduction to those checks, we’re talking about a direct hit to someone’s ability to make ends meet.
8 States That Will Tax Social Security Benefits in 2026
One of the most significant—and often surprising—ways these benefits can be shrunk is through taxation. While the federal government taxes a portion of benefits for some recipients, depending on their overall income, a separate layer exists at the state level. Here’s where things get tricky, and a bit of good news: only a handful of states actually dip into this income.
As we look ahead to 2026, the landscape of states that tax Social Security benefits is notably small. Just eight states will continue the practice: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont.
It’s worth noting a positive shift on the map: West Virginia, which is often grouped with these states, is fully phasing out its tax and will no longer touch Social Security income starting in 2026.
Some State Rules Can Surprise New Retirees
Now, simply being in one of these eight states doesn’t mean your entire benefit is automatically taxed. The approach is notoriously complex and varies. Most of these states use the federally taxable portion of your benefits as their starting point.
That’s the amount, up to a maximum of 85% of your total benefit, that the IRS includes in your adjusted gross income based on your “provisional income.” But critically, each state has built its own set of rules, exemptions, deductions, and income thresholds designed to soften the blow.
US States That Tax Social Security Benefits
While the federal government taxes a portion of Social Security income for many recipients, a handful of states also levy a tax. However, most of these states provide significant exemptions or credits based on age and income. The rules vary considerably by state, as outlined below.
- Colorado: Social Security benefits are generally included in taxable income. However, residents aged 65 or older can deduct 100% of the federally taxable portion, meaning most pay no state tax. For those aged 55 to 64, a full or partial deduction is available if their Adjusted Gross Income (AGI) is $75,000 or less (single) or $95,000 or less (joint filers).
- Connecticut: Benefits are fully exempt from state tax if federal AGI is below $75,000 (single) or $100,000 (joint). For income above these thresholds, a 75% exemption applies, meaning only 25% of the federally taxable portion is subject to tax.
- Minnesota: A full exemption applies for single filers with an AGI of $84,490 or less and joint filers with $108,320 or less. For income above these thresholds, partial exemptions are available but are gradually reduced (phasing out at a rate of 10% per income bracket).
- Montana: Benefits are not taxed if AGI is under $25,000 (single) or $32,000 (joint). A partial tax applies for income between that level and $34,000 (single)/$44,000 (joint). Above the upper threshold, up to 85% of benefits (the federally taxable portion) is subject to state tax.
- New Mexico: A full exemption is granted if AGI is $100,000 or less (single) or $150,000 or less (joint). For income exceeding these amounts, the federally taxable portion of benefits is taxed at the state’s regular income tax rates, which range from 1.7% to 5.9%.
- Rhode Island: An exemption is available for individuals who have reached full Social Security retirement age, provided their AGI is below $104,200 (single) or $133,250 (joint). For those above the income limit, benefits are taxed at the standard state rates of 3.75% to 5.99%.
- Utah: The state taxes the federally taxable portion of benefits (up to 85%) at a flat rate of 4.5%. However, a specific nonrefundable tax credit for Social Security income can significantly reduce or even eliminate the tax liability. This credit is fully available for moderate incomes and phases out at higher income levels.
- Vermont: Benefits are fully exempt if AGI is less than $50,000 (single) or $65,000 (joint). A partial exemption applies for incomes up to $60,000 (single)/$75,000 (joint). Above these limits, the federally taxable portion is subject to state tax.
The remaining states do not tax Social Security benefits, and in those that do, the percentage or amount they apply may vary depending on your personal situation: marital status, other income, and other factors.
I recommend consulting the tax department website of each state or a tax advisor for exact calculations, as thresholds are adjusted annually for inflation in some cases.
