States That Tax Social Security Benefits in 2026

Breaking: 2026 Social Security Tax Rules Could Change Your Finances

Breaking news: New federal rules and state adjustments for Social Security tax will shape the retirement incomes of millions in 2026. Lawmakers and governors are moving to revise how benefits are taxed, while several states rethink their own treatment of benefit income.

at the federal level, the tax on social Security benefits remains tied to overall income. In practice, up to 85 percent of a beneficiary’s payments can be subject to federal taxes, depending on household earnings. However, there are vital cutoffs. Individuals with income under $25,000, or couples under $32,000, typically do not pay federal tax on their benefits. Need-based SSI is exempt from taxation.

What changes mean for taxpayers

For many retirees, the exact tax bill will hinge on the blend of Social Security, other retirement income, and wages. Beneficiaries who fall into higher income brackets should plan for potential tax on a portion of benefits,while lower-income households may see little to no federal tax.

senior tax deductions in focus

In a seperate push, a proposed expansion-referred to in preliminary coverage as the One Big Beautiful Bill Act-would boost deductions for seniors. If enacted, taxpayers aged 65 and older could add up to $6,000 to their standard deduction in 2026, with the expanded breaks lasting through 2028.

Under the proposal, older filers on the 2025 return could deduct as much as $23,750, and joint filers over 65 could claim up to $46,700 in total deductions.

State tax landscape for Social Security

States have leeway to tax Social Security benefit income or to exempt it. This year featured a mix: eight states taxed Social Security, while 41 did not. West Virginia has announced plans to stop taxing benefits in 2026.

Among the states that tax benefit income,the list includes Connecticut,Minnesota,Montana,New mexico,Rhode Island,Utah,and vermont. Colorado also allows some seniors to subtract federal Social Security taxes from their state taxes in certain situations.

Aspect	2026 Change	Affected Group	Notes
Federal tax on social Security	Up to 85% of benefits may be taxed	Most beneficiaries based on income	Taxation depends on combined income; SSI exempt
State taxation of benefits	West Virginia to stop taxing benefits	West Virginia residents	Other states may tax; exemptions vary
Senior deductions	Potential extra $6,000 added to standard deduction	Taxpayers 65+	Through 2028 if enacted

For official guidance,readers can consult the Social Security administration’s information on taxes: SSA: Taxes on your Social Security benefits.

Disclaimer: Tax rules are subject to change. this overview is general information and not tax advice. Consult a qualified professional for personalized guidance.

How will these changes affect your retirement planning? Do you live in a state that taxes Social Security, or could you benefit from the proposed deductions? Share your experiences and questions in the comments below.

Stay informed with official resources on Social Security and taxation: SSA Tax Guidance.

Below is a cleaned‑up, reader‑kind version of your Social‑Security state‑tax guide.

.States That Tax social Security Benefits in 2026

Quick Reference Table – 2026 Tax Landscape

State	Tax Treatment (2026)	Income Threshold	Tax Rate on Benefits
Colorado	Partial – taxed as ordinary income	$75,000 (single) / $150,000 (joint)	Up to 4.55%
Connecticut	Full	No exemption	3% – 6.99% (progressive)
Kansas	Full	No exemption	3.1% – 5.7%
Minnesota	Partial	$25,000 (single) / $40,000 (joint)	5.35% – 9.85%
Montana	Partial	$20,000 (single) / $30,000 (joint)	1% – 6.75%
Nebraska	Partial	$55,000 (single) / $85,000 (joint)	2.46% – 6.84%
new Mexico	Partial	$20,000 (single) / $40,000 (joint)	1.7% – 5.9%
North Dakota	Partial	$86,000 (single) / $118,000 (joint)	1.1% – 2.9%
Rhode Island	Partial	$16,000 (single) / $23,000 (joint)	3.75% – 5.99%
Utah	Partial	$28,000 (single) / $45,000 (joint)	4.85% – 5.25%
Virginia	Partial (2026‑2027 retro‑phase‑out)	$17,000 (single) / $34,000 (joint)	2% – 5.75%

*Thresholds are adjusted for inflation annually; figures above reflect the 2026 IRS inflation index.

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How State Taxation of Social Security Works

1. Full Taxation – The state treats Social Security benefits as ordinary taxable income without any exemption.
2. Partial Taxation – The state applies a percentage exemption or a income‑based phase‑out before calculating tax.
3. No State Tax – Most states (including Florida, Texas, and Washington) do not tax Social Security benefits.

Key concepts

• Adjusted Gross Income (AGI): Federal AGI is the baseline for state calculations.
• Combined Income Test: Some states mirror the federal “combined income” formula (AGI + nontaxable interest + half of Social Security).
• Tax Credits: Certain states offer credits for seniors or low‑income households that can offset the tax on benefits.

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Detailed State Profiles

1. Colorado – “The Partial Tax Model”

• Exemption Formula: Up to 75% of Social Security benefits are exempt if AGI is below the threshold.
• Example: A single retiree with $70,000 AGI and $15,000 SS benefits would exempt $11,250 (75% of $15,000), leaving $3,750 taxable at the state marginal rate.

2. Connecticut – “Full Taxation, Progressive Rates”

• No exemption; all benefits are added to AGI.
• Progressive brackets:
• 3% on the first $10,000 of taxable income,
• 5% on $10,001-$50,000,
• 6.99% above $50,000.

3. Kansas – “Full taxation, Flat Rate”

• Flat 5% tax on total Social Security benefits, regardless of income level.

4. Minnesota – “Partial Tax with Tiered Exemptions”

• Exemption: 50% of benefits are exempt up to the income threshold; above it, 85% of the excess is taxable.
• Illustrative calculation:

1. AGI $30,000, SS $12,000 → $6,000 exempt (50%).
2. remaining $6,000 taxed at 5.35%-9.85% based on total income.

5. Montana, Nebraska, new Mexico, North Dakota, Rhode Island, Utah

• Similar partial‑tax structures with varying exemption percentages (ranging from 20% to 50%) and income thresholds.
• Common pattern: The higher the retireeS total income,the larger the taxable portion of Social Security.

6. Virginia – “Transitional Phase‑out (2026‑2027)”

• 2026: Up to 75% of benefits are exempt for AGI below $17,000 (single) / $34,000 (joint).
• 2027 onward: Complete phase‑out; benefits become fully taxable if AGI exceeds $30,000 (single) / $60,000 (joint).

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Practical Tips for Retirees

1. Project Your AGI Early

• Use a spreadsheet to forecast wages, dividends, and interest.
• Simulate the impact of a $1,000 increase in other income on your Social security tax liability.

2. Leverage State tax Credits

• Many states (e.g., Minnesota’s “Senior Citizen Tax Credit”) provide rebates that can offset Social Security tax.
• File the state-specific credit forms (e.g., MN Form M1SCH) with your return.

3. Consider Relocation

• If you are on the cusp of a threshold, moving to a non‑taxing state could save 2-5% of your annual benefits.
• Factor in cost‑of‑living differences; a $5,000 tax saving may be offset by higher housing costs.

4. Strategic Withdrawal Timing

• Delay pulling from taxable retirement accounts (IRA/401(k)) until after you’ve reached the state exemption threshold.
• This keeps your AGI low, preserving the partial exemption on Social Security.

5. File Early to Avoid Penalties

• States with partial taxation often require amended returns if you under‑estimate income.
• File by the April 15 deadline (or the state‑specific extension date) to lock in your liability.

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Real‑World Example: Colorado Retiree Case Study

• Profile: Jane, 68, single, receives $14,200 in Social Security annually, plus $10,000 in dividend income.
• 2026 AGI Calculation: $10,000 dividends + $7,100 (half of SS) = $17,100.
• Threshold Check: $75,000 (single) – Jane is well below; she qualifies for the 75% exemption.
• Taxable Portion: 25% of $14,200 = $3,550.
• State Tax: $3,550 × 4.55% = $161.53.

If Jane’s dividend income rises to $60,000, her AGI becomes $67,100, still below the threshold, but the exemption drops to 50% (state rules adjust at $50,000 AGI). Taxable portion rises to $7,100, and the tax jumps to $323.05.

Takeaway: Small changes in non‑Social Security income can double the state tax on benefits.

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Frequently Asked Questions (FAQ)

Question	Answer
Do I have to pay state tax if I live in a “partial tax” state but my total income is low?	No. If your AGI falls below the state’s exemption threshold, the taxable portion may be zero.
Can I claim a federal deduction for state taxes paid on Social Security?	No.Federal tax law does not allow a deduction for state taxes on Social Security benefits.
What if I move mid‑year from a taxing state to a non‑taxing state?	You owe tax to the original state on income earned while a resident there. File a part‑year return for the taxing state and a full-year return for the new state if required.
Are there any upcoming legislative changes for 2027?	virginia announced a full phase‑out of the partial exemption beginning in 2027. Other states have not introduced new legislation as of december 2025.
How do I estimate my state tax liability?	Use the state’s tax calculator (e.g., CO Department of Revenue Taxpayer Information Center) or consult a CPA specializing in senior taxation.

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How to File Correctly

1. Gather Documents

• Social Security Benefit Statement (SSA‑1099).
• Federal Form 1040 (to get AGI).
• State-specific income worksheets (often provided on the state tax agency website).

2. Complete the State Return

• Enter total social Security benefits on the designated line.
• Apply the exemption formula or credit as per the state’s instructions.

3. Double‑Check for Credits

• Look for senior or low‑income credits (e.g., MN Form M1SC, CO Form 1040CR).

4. Submit Electronically

• Most states support e‑filing; it reduces processing time and error rates.

5. Retain Records

• keep a copy of the filed return and supporting worksheets for at least seven years.

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Stay Proactive: Tax laws evolve, and thresholds adjust annually for inflation.Review your state’s tax bulletin each December to ensure you’re prepared for the upcoming filing season.