Millions of Americans rely on Social Security as a primary source of retirement income. While most retirees don’t have to worry about state taxes on those benefits, residents of a small number of states may still owe state income tax on some or all of their Social Security payments.
The good news is that the overwhelming majority of states no longer tax Social Security benefits. However, retirees should remember that federal tax rules may still apply depending on their total income.
Which States Tax Social Security Benefits?
As of 2026, only eight states continue to tax Social Security benefits in some form:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
Each state has its own tax laws, exemptions, and income thresholds. In many cases, retirees with lower incomes or those above a certain age may qualify for partial or complete exemptions.
Because state tax rules can change over time, retirees should review the latest guidance from their state tax agency or consult a qualified tax professional before filing.
Most States Do Not Tax Social Security
The remaining 42 states, along with the District of Columbia, do not impose state income tax on Social Security retirement benefits.
This has become an increasingly important factor for retirees when deciding where to live after leaving the workforce.
However, the absence of Social Security taxes doesn’t necessarily make one state less expensive than another. Some states with no tax on Social Security may have higher property taxes, sales taxes, or other state and local taxes that affect retirees’ overall cost of living.
Federal Taxes May Still Apply
Even if your state does not tax Social Security, the federal government may tax part of your benefits depending on your combined income.
Combined income generally includes:
- Your Adjusted Gross Income (AGI)
- Any tax-exempt interest income
- One-half of your annual Social Security benefits
Depending on your filing status and combined income, a portion of your benefits may become subject to federal income tax.
Federal Tax Guidelines
| Filing Status | Combined Income | Potentially Taxable Benefits |
|---|---|---|
| Single or Head of Household | Less than $25,000 | None |
| Married Filing Jointly | Less than $32,000 | None |
| Single or Head of Household | $25,000–$34,000 | Up to 50% |
| Married Filing Jointly | $32,000–$44,000 | Up to 50% |
| Single or Head of Household | More than $34,000 | Up to 85% |
| Married Filing Jointly | More than $44,000 | Up to 85% |
It’s important to note that “up to 85%” does not mean 85% of your benefits are lost. Instead, it means up to 85% of your Social Security benefits may be included as taxable income when calculating your federal income tax.
Taxes Are Only One Part of Retirement Planning
Taxes are just one factor retirees should consider when evaluating retirement finances.
Other important costs include:
- Housing expenses
- Healthcare and Medicare premiums
- Property taxes
- Insurance
- Utilities
- Inflation
- State sales taxes
Looking at the full financial picture may provide a more accurate estimate of retirement costs than focusing on Social Security taxes alone.
Planning Ahead Can Reduce Surprises
Retirees approaching Social Security eligibility may benefit from reviewing:
- Expected annual retirement income.
- Federal and state tax obligations.
- Required minimum distributions (if applicable).
- Pension or investment income.
- Where they plan to live during retirement.
Understanding these factors before claiming benefits can help improve budgeting and avoid unexpected tax bills.
Bottom Line
Although most states no longer tax Social Security benefits, Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont still impose some level of state taxation under certain circumstances. Even retirees living in states without Social Security taxes should remember that federal income tax may still apply depending on their total income. Reviewing both federal and state tax rules can help retirees better prepare for their financial future.
