Social Security tax by state in 2026: Which 8 states tax retirement benefits, where can retirees keep more of their benefits, and how much could you owe the IRS?
Your Social Security check could face two tax bills in 2026: Retiring does not always mean keeping every dollar of your Social Security check. In 2026, just over half of beneficiaries are expected to pay federal income tax on part of their benefits, according to the Congressional Budget Office. State taxes add another concern, but only eight states still tax Social Security. The amount retirees owe depends on where they live and how much other income they receive.
Federal Social Security tax in 2026: How much of your benefits can be taxed?
The federal government uses a calculation called combined income to decide whether Social Security benefits are taxable. It includes half of your annual Social Security benefits, your adjusted gross income and any tax-exempt interest.
Adjusted gross income can include wages, pension payments and taxable withdrawals from traditional retirement accounts. A higher combined income can mean a larger share of your benefits becomes subject to federal income tax.
For most beneficiaries, the federal rules allow up to 50% of benefits to be taxable at one income level and up to 85% at a higher level. The 85% limit is the maximum. Even retirees with high incomes do not pay federal income tax on their entire Social Security benefit.
Married couples filing separately face different rules. If they lived together at any point during the year, up to 85% of their benefits can be taxable, regardless of how much they earn. Couples who lived apart throughout the year are subject to the $25,000 threshold.
One major concern is that the federal income thresholds have not changed since 1994. As wages, pensions and retirement savings have grown, more beneficiaries can fall within the taxable-income rules.
Eight states that tax Social Security benefits in 2026
Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont are the only eight states that still tax Social Security benefits in 2026.That does not mean every retiree in these states has to pay. Most offer exemptions or deductions based on age, income or both. The rules vary, and some retirees may qualify for a complete exemption.
New Mexico, for example, exempts Social Security benefits for taxpayers with adjusted gross income of $100,000 or less for single filers. The limit is $150,000 for married couples filing jointly.
The remaining 42 states and Washington, D.C., do not tax Social Security benefits. This gives retirees in those locations one less state-level tax to consider when planning their retirement income.
West Virginia, Nebraska, Kansas and Missouri have ended their Social Security taxes
The number of states taxing Social Security has fallen in recent years. West Virginia completed its phaseout in 2026, making all Social Security benefits exempt from state income tax, regardless of a retiree’s income.
Kansas and Missouri changed their rules in 2024 by removing income limits that had prevented some higher-earning retirees from receiving a full exemption. Nebraska also ended its Social Security tax in 2024, three years ahead of its original schedule.
Rhode Island Social Security tax change
Rhode Island is set to change its rules in 2027. The state plans to stop taxing Social Security benefits for eligible retirees. Under the existing rules, taxpayers must meet both age and income requirements to qualify for relief.
The change is expected to save around 9,200 Rhode Islanders money on their state taxes. Connecticut and Vermont also considered broader exemptions in 2026, but neither proposal became law. Their existing tax rules remain in place.
How retirement account withdrawals can increase your Social Security tax
Retirees cannot change federal income thresholds, but they can manage the income that goes into the combined-income calculation.
A large withdrawal from a traditional IRA or 401(k) can increase adjusted gross income in a particular year. That may push more Social Security benefits into the taxable category. Spreading withdrawals across several years can help manage the annual tax burden.
Roth IRA withdrawals work differently. Qualified withdrawals do not count toward the income calculation used to determine whether Social Security benefits are taxable. Using Roth savings for additional cash in a particular year may therefore help keep combined income lower.
The same decision does not work for everyone. A large Roth conversion from a traditional IRA, for example, can increase taxable income in the year it takes place. Retirees should review the tax impact before making major withdrawals or conversions.