States That Tax Social Security Income

Social Security checks may feel like the reward for surviving decades of alarm clocks, meetings, payroll deductions, and coworkers who reheated fish in the office microwave. Unfortunately, retirement does not always mean saying goodbye to income taxes.

At the federal level, a portion of Social Security benefits can be taxable when a recipient has enough income from pensions, wages, investments, retirement-account withdrawals, and other sources. State taxation is a separate question. Most states leave Social Security alone, but a small group may tax at least some benefits.

For the 2026 tax year, eight states can tax Social Security income under certain circumstances: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. Even there, exemptions, deductions, credits, age requirements, and income limits protect many residents from actually paying state tax on their benefits.

This guide explains which states tax Social Security income, how the rules differ, and what retirees can do to avoid an unpleasant April surprise.

Is Social Security Income Taxable?

Social Security may be taxed at two different levels:

• Federal income tax: Up to 85% of benefits may be included in federal taxable income.
• State income tax: Eight states may tax some of the federally taxable portion, subject to state-specific relief.

The phrase “85% taxable” is frequently misunderstood. It does not mean the government takes 85% of a retiree’s check. It means that as much as 85% of the benefit can be added to taxable income and taxed at the person’s ordinary federal income tax rate.

How the Federal Government Calculates Taxable Benefits

The IRS uses a measurement commonly called combined income or provisional income. It generally equals:

Adjusted gross income + tax-exempt interest + one-half of Social Security benefits

For a single filer, benefits may begin becoming taxable when combined income exceeds $25,000. The threshold is $32,000 for married couples filing jointly. When combined income exceeds $34,000 for single filers or $44,000 for joint filers, up to 85% of benefits may be taxable.

Supplemental Security Income, commonly called SSI, is not taxable. Social Security retirement, survivor, and disability benefits, however, can fall under the federal taxation formula.

How Many States Tax Social Security in 2026?

Only eight states may tax Social Security benefits in 2026. That number has been shrinking as state lawmakers compete to look more retirement-friendly.

Kansas, Missouri, and Nebraska stopped taxing benefits beginning with the 2024 tax year. West Virginia gradually reduced its tax and completed the phaseout for the 2026 tax year. As a result, West Virginia is no longer included among the states that tax Social Security income for 2026.

Eight States That Tax Social Security Income

1. Colorado

Colorado technically belongs on the list, but many older residents owe no state income tax on Social Security. Taxpayers who are at least 65 may subtract the entire federally taxable portion of their benefits from Colorado taxable income.

Residents ages 55 through 64 may also claim a full subtraction when federal adjusted gross income is no more than $75,000 for single filers or $95,000 for joint filers. Above those limits, the Social Security subtraction is generally capped at $20,000.

This makes Colorado far friendlier than the label “taxes Social Security” suggests. A 68-year-old whose federal return includes $18,000 of taxable benefits can normally subtract that $18,000 on the Colorado return. The federal tax may remain, but the state tax can disappear.

2. Connecticut

Connecticut provides a full exemption when federal adjusted gross income is below certain limits. Benefits are fully exempt for single or married-separate filers with federal AGI below $75,000. The threshold is $100,000 for joint filers, heads of household, qualifying surviving spouses, and certain other eligible filers.

Residents over those thresholds may still receive a partial Social Security adjustment. The state calculation generally protects most of the federally taxable amount rather than abruptly taxing every benefit dollar.

Connecticut’s lesson is simple: do not assume that exceeding the full-exemption limit means losing every bit of relief. Complete the state worksheet before composing an angry letter to Hartford.

3. Minnesota

Minnesota begins with the Social Security amount included in federal adjusted gross income. It then allows qualifying taxpayers to subtract some or all of that amount.

For tax year 2026, the simplified subtraction begins phasing out when provisional income exceeds approximately:

• $110,780 for married couples filing jointly and qualifying surviving spouses
• $86,410 for single filers and heads of household
• $55,390 for married taxpayers filing separately

Minnesota also offers an alternative subtraction method that may produce a better result in some situations. Tax software usually compares the available methods, but taxpayers preparing returns manually should work through the applicable schedule instead of choosing whichever number looks friendliest.

4. Montana

Montana generally includes Social Security in state taxable income to the extent the benefits are included in federal taxable income. Unlike several states on this list, Montana does not provide a broad Social Security exemption based on moderate income.

However, taxpayers age 65 or older can claim an inflation-adjusted subtraction from federal taxable income. The subtraction was $5,660 for the 2025 tax year and may reduce the amount of retirement income ultimately exposed to Montana tax.

Because Montana starts with federal taxable income, decisions that increase the federal taxable share of Social Security can also raise the state bill. Large traditional IRA withdrawals, investment gains, and Roth conversions deserve particular attention.

5. New Mexico

New Mexico once had a reputation for taxing retirees more aggressively, but its Social Security exemption now protects most beneficiaries.

The exemption is generally available when income is below:

• $100,000 for single filers
• $150,000 for married couples filing jointly, heads of household, and qualifying surviving spouses
• $75,000 for married couples filing separately

Taxpayers below the applicable threshold can subtract Social Security income included in federal adjusted gross income. Those above the limit may lose the exemption, making income timing especially important near the boundary.

A large capital gain or retirement-account withdrawal could push a taxpayer over the limit. The state tax created by that extra income may therefore be larger than expectednot because New Mexico secretly installed a trapdoor, but because exemption cliffs have little sympathy for almost qualifying.

6. Rhode Island

Rhode Island offers a Social Security modification to taxpayers who have reached the Social Security full retirement age and remain below an indexed income limit.

For 2025 returns filed in 2026, the federal adjusted gross income limits are $107,000 for qualifying single filers and $133,750 for married couples filing jointly. The state updates these limits periodically, so retirees should use the figures printed in the instructions for the tax year being filed.

A qualifying taxpayer may subtract the federally taxable portion of Social Security benefits. Someone who has not reached full retirement age, or whose income exceeds the limit, may not qualify even when the benefit recipient is already collecting Social Security.

That age rule matters. Starting benefits at 62 does not mean a person has reached full retirement age for Rhode Island tax purposes.

7. Utah

Utah includes the federally taxable portion of Social Security in its income-tax calculation, but it offers a nonrefundable credit designed to offset the state tax on those benefits.

The full credit is generally available below an income threshold and then phases out at a rate of 25 cents for each dollar over the limit. Recent thresholds have been $54,000 for many single filers and $90,000 for married couples filing jointly.

Because the benefit is a credit rather than a deduction, it reduces Utah tax dollar for dollar, up to the available liability. However, it is nonrefundable. A credit larger than the tax owed does not turn into bonus vacation money.

Utah residents who also qualify for the state retirement credit should review the restrictions carefully because taxpayers generally cannot claim overlapping credits on the same return.

8. Vermont

Vermont fully exempts federally taxable Social Security benefits for many lower- and moderate-income residents. The full exemption generally applies at adjusted gross income of up to $50,000 for single filers and $65,000 for joint filers.

The exemption then phases out over the next $10,000 of income. In practical terms, single filers may receive partial relief between $50,000 and $60,000, while joint filers may receive partial relief between $65,000 and $75,000.

Vermont also offers certain retirement-income exemptions, but taxpayers may have to choose between them rather than stacking every available break into one glorious tax-free sandwich.

States That Do Not Tax Social Security Benefits

All other states and the District of Columbia do not tax Social Security retirement benefits. This group includes states with no broad individual income tax, such as Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming, as well as states that levy income tax but specifically exempt Social Security.

Washington does not impose a conventional individual income tax on wages or Social Security, although it has a separate capital-gains tax that may affect some high-income households. New Hampshire also no longer taxes interest and dividend income as of 2025.

However, “does not tax Social Security” does not automatically mean “cheap place to retire.” Property taxes, sales taxes, insurance premiums, housing costs, health care, and taxes on pensions or IRA distributions can outweigh the savings.

How to Reduce Taxes on Social Security Income

Control Traditional Retirement-Account Withdrawals

Traditional IRA and 401(k) withdrawals increase adjusted gross income. That can make a larger portion of Social Security taxable federally and can reduce state exemptions, deductions, or credits.

Instead of taking one enormous withdrawal to fund several years of expenses, a retiree may benefit from spreading distributions across multiple tax years. Required minimum distributions must still be considered once they begin.

Plan Roth Conversions Before Claiming Benefits

A Roth conversion creates taxable income in the year of conversion. Completing conversions during lower-income years before Social Security begins may reduce future required distributions and protect income-based state exemptions.

Conversions should be modeled carefully. Converting too much at once can increase federal tax, Medicare premiums, and state tax. Tax planning is less about pressing the biggest button and more about pressing the right-sized button several years in a row.

Watch Capital Gains and Tax-Exempt Interest

Capital gains can raise adjusted gross income, while tax-exempt municipal-bond interest is included in the federal combined-income calculation for Social Security. Income described as “tax-exempt” can therefore still cause more benefits to become taxable.

Consider Qualified Charitable Distributions

Eligible IRA owners can make qualified charitable distributions directly from an IRA to qualified charities. A properly completed distribution may count toward the required minimum distribution without being included in adjusted gross income.

Lower AGI can help preserve Social Security exemptions and reduce exposure to Medicare income-related surcharges. The distribution must follow federal requirements, including age and direct-transfer rules.

Use the Federal Senior Deduction

For tax years 2025 through 2028, eligible taxpayers age 65 or older may claim an additional federal deduction of up to $6,000 per person. A qualifying married couple may receive up to $12,000.

The deduction phases out when modified adjusted gross income exceeds $75,000 for an individual or $150,000 for a joint return. It does not repeal the federal tax on Social Security, but it can reduce taxable income enough that many retirees owe less federal tax.

Compare the Entire Tax Picture Before Moving

Relocating solely to avoid state tax on Social Security can be an expensive way to save a modest amount. Suppose a retiree saves $600 in annual income tax but pays $2,500 more in property tax, homeowners insurance, and utility costs. The palm trees may still be lovely, but the tax strategy has wandered off without supervision.

Compare taxes on pensions, retirement-account withdrawals, property, purchases, gasoline, estates, and inheritances. Cost of living and access to family and medical care matter just as much.

Real-World Experiences With State Social Security Taxes

The following examples are composites designed to illustrate situations retirees commonly encounter. They are not descriptions of specific taxpayers.

The Roth Conversion That Changed Two Tax Returns

Consider a retired couple receiving $52,000 in annual Social Security benefits and $28,000 from a pension. Their accountant recommends converting part of a traditional IRA to a Roth. They choose a $70,000 conversion because it sounds efficient: pay tax now, enjoy tax-free Roth withdrawals later.

The conversion does more than create $70,000 of taxable income. It also causes a larger share of their Social Security benefits to become taxable federally. If they live in a state with an income-based Social Security exemption, the higher AGI may reduce or eliminate that state benefit as well.

The conversion may still be a smart long-term decision, but the couple learns that its true cost must include federal tax, state tax, Medicare effects, and the indirect taxation of benefits. The better experience often comes from converting smaller amounts over several years.

The Retiree Who Assumed “No State Tax” Meant No Tax Return

A 70-year-old Colorado resident learns that the state allows a full subtraction for federally taxable Social Security. He concludes that no Colorado return is necessary. Unfortunately, he also receives consulting income and withdraws money from a traditional IRA.

Colorado may not tax his Social Security after the subtraction, but his other income can still create a filing requirement and state liability. The experience highlights a crucial distinction: exempt benefits do not necessarily make the entire taxpayer exempt.

The Income-Limit Cliff

A single New Mexico retiree normally reports income just below the state’s Social Security exemption limit. One year, she sells appreciated investments to help a child buy a home. The capital gain pushes her income above the threshold.

She expects tax on the gain but does not expect to lose the Social Security exemption. Her state taxable income rises for two reasons at once. The lesson is not that generosity is financially dangerous. It is that a large gain, property sale, bonus, or retirement withdrawal should be reviewed before December 31, when there may still be time to spread transactions across tax years.

The Couple Comparing Two Retirement States

A couple considers moving from Minnesota to a state with no individual income tax. Their spreadsheet initially shows attractive savings because the destination state does not tax Social Security, pensions, or IRA distributions.

Then they add homeowners insurance, property taxes, sales taxes, vehicle costs, and the price of traveling back to visit family. The financial advantage becomes much smaller. They ultimately move, but the decision is based on weather, community, and familynot one line on a tax return.

This is the most useful experience retirees can borrow: state Social Security taxation matters, but it should be evaluated as one part of a complete retirement budget. A state that taxes a small portion of benefits while offering affordable housing may be less expensive than a “tax-free” state where insurance and property costs consume the savings.

Conclusion

Eight states may tax some Social Security income in 2026: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. Yet the headline does not tell the whole story. Most of these states provide substantial relief based on age, filing status, or income.

Retirees should first determine how much of their Social Security is taxable federally. They should then apply the relevant state subtraction, exemption, or credit. Income from IRA withdrawals, pensions, investments, employment, and Roth conversions can affect both calculations.

The smartest approach is to project taxes before making large financial moves. A few minutes of planning can prevent Social Security taxation from becoming the least entertaining surprise of retirement.

Note: Tax rules, thresholds, and indexed amounts can change. Review the instructions issued by the IRS and your state tax department for the specific tax year being filed. This article provides general educational information and is not individualized tax advice.