Social Security Tax by State 2026: Which States Tax Your Benefits?

Social Security Taxes by State 2026: 9 States Still Tax Benefits

Good news for Social Security recipients: 41 states fully exempt Social Security benefits from state income tax in 2026. The number of states taxing Social Security has been declining — Missouri and Kansas both eliminated their Social Security taxes in 2024, bringing the total down from 11 to just 9 states.

The 9 states that still tax Social Security in 2026 are: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Even in these states, most offer partial exemptions based on income — so not every Social Security recipient will owe state tax on their benefits.

At the federal level, Social Security taxation is more complex: up to 85% of your Social Security benefits can be included in federal taxable income depending on your total income. Understanding both the federal and state rules is essential for retirement tax planning.

The Complete 50-State Guide to Social Security Taxation

The table below shows every US state and how it treats Social Security benefits for state income tax purposes in 2026.

States That Fully Exempt Social Security (41 States)

These states impose zero state income tax on Social Security benefits — either because they have no income tax at all, or because they specifically exempt Social Security:

States with no income tax (automatically exempt): Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Wyoming

States with income tax that fully exempt Social Security: Alabama, Arizona, Arkansas, California, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas (as of 2024), Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota (exempt below income thresholds — see below), Mississippi, Missouri (as of 2024), Nebraska (phasing out taxation through 2025), New Hampshire (no income tax on wages/SS), New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Virginia, Washington, Wisconsin, Washington DC

Note: Nebraska completed its phase-out of Social Security taxation in 2025 — benefits are now fully exempt.

The 9 States That Tax Social Security in 2026

Here are the details for each of the 9 remaining states that tax Social Security, including the exemptions available:

Important note on West Virginia: West Virginia is phasing out Social Security taxation. Beginning with tax year 2026, Social Security benefits will be 100% exempt from West Virginia income tax. This effectively means only 8 states will be taxing Social Security from 2026 onward, though the legal phase-out language may not be complete until the 2026 returns are filed in early 2027.

Federal Social Security Taxation Rules

Regardless of what your state does, you also need to understand federal Social Security taxation. The IRS uses a concept called "combined income" (also called "provisional income") to determine how much of your Social Security is subject to federal income tax:

Combined Income = Adjusted Gross Income + Nontaxable Interest + 50% of Social Security Benefits

The thresholds work as follows for 2026:

The maximum federal tax on Social Security is 85% of benefits — the remaining 15% is never taxed federally. But even if 85% is taxable, it's taxed at your regular income tax rate, not a special rate.

Worked Examples: Social Security Tax at $40K and $60K Combined Income

Let's walk through how Social Security taxation works in practice at two common income levels: $40,000 and $60,000 in combined income for a single retiree.

Example 1: Single Retiree, $40,000 Combined Income

Assume: $20,000 Social Security benefits, $15,000 in other income (pension/IRA), $5,000 in investment interest.

Step 1 — Calculate combined income:

• Adjusted Gross Income (before SS): $20,000 ($15,000 pension + $5,000 interest)
• Nontaxable interest: $0 (already in AGI in this example)
• 50% of Social Security: $10,000
• Combined Income: $30,000

Step 2 — Apply federal thresholds:

Combined income of $30,000 falls in the middle range ($25,000–$34,000). The taxable portion of Social Security is the lesser of:

• 50% of SS benefits = $10,000, OR
• 50% of the amount above $25,000 = 50% × $5,000 = $2,500

The IRS uses the smaller of these calculations: $2,500 of Social Security is federally taxable in this scenario. At a 12% federal tax rate, the federal tax on this SS income is just $300.

State impact: If this retiree lives in Vermont (which taxes SS above $45,000 combined income), they owe zero Vermont tax on SS because their income is below $45,000. If they live in Montana, which follows federal rules, approximately 12.5% of their SS may be state-taxable, adding roughly $25–50 in Montana state tax.

Example 2: Single Retiree, $60,000 Combined Income

Assume: $24,000 Social Security benefits, $30,000 in other income (IRA distributions), $6,000 in interest/dividends.

Step 1 — Calculate combined income:

• AGI (before SS): $36,000
• 50% of Social Security: $12,000
• Combined Income: $48,000

Step 2 — Apply federal thresholds:

Combined income of $48,000 exceeds $34,000, so up to 85% of Social Security is federally taxable. The IRS formula gives the lesser of:

• 85% of total SS = $20,400, OR
• $4,500 (50% of $34,000–$25,000) + 85% of excess above $34,000 ($48,000–$34,000 = $14,000 × 85% = $11,900) = $16,400

$16,400 of Social Security is federally taxable in this scenario. At a 22% federal tax rate, the federal tax attributable to SS is approximately $3,608.

State impact by state:

• Texas/Florida/Wyoming (no income tax): Zero state tax on any income
• New Mexico (threshold $100K): Below the $100K exemption threshold — zero NM state tax on SS
• Minnesota (threshold $82,190): Below MN threshold — zero MN state tax on SS
• Connecticut (threshold $75K): Below CT threshold — zero CT state tax on SS
• Vermont (threshold $45K income): Above $45K threshold — SS partially taxable in Vermont; at VT's top applicable rate of 3.35%, roughly $549 in Vermont SS tax

Planning Strategies to Reduce Social Security Taxes

Several strategies can legally reduce how much of your Social Security is taxed:

• Roth conversions before retirement: Converting traditional IRA funds to Roth while you're still working reduces future RMDs. Lower RMDs in retirement mean lower combined income, which means less SS taxable.
• Managing IRA distributions: Taking slightly less from your IRA each year can keep combined income below the thresholds that trigger SS taxation. A gap year strategy — taking extra distributions in low-income years — can build up Roth balances without triggering high SS tax.
• Municipal bonds: Tax-exempt municipal bond interest still counts as "combined income" for SS purposes (as nontaxable interest). Be aware that muni income isn't as clean a planning tool for SS as it might seem.
• Geographic arbitrage: Moving from a state that taxes SS (Vermont, Minnesota) to one that doesn't (Florida, Wyoming, Texas) eliminates the state component. For someone receiving $24,000/year in SS benefits, moving from Vermont to Florida saves approximately $300–900/year in state SS taxes depending on their total income level.