Will state taxes on Social Security change in 2026 and which states tax benefits?
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Executive summary
Federal rules affecting how much of Social Security is taxed at the federal level will change in 2026 (including a new senior deduction and a shift in taxable wage base), and most states already do not tax Social Security — nine states tax some portion today, but West Virginia will stop taxing benefits starting in tax year 2026, reducing the number of taxing states to eight [1] [2] [3]. Available sources do not mention a new uniform federal ban on state taxation of Social Security benefits (not found in current reporting).
1. What’s changing at the federal level in 2026 — the headline
Congress and the Treasury/IRS environment entering 2026 brings two different kinds of changes: one set tweaks payroll-tax mechanics (the Social Security wage base rises to $184,500 for 2026, changing how much wages are subject to the 6.2% OASDI payroll tax) and another affects how many retirees pay federal income tax on benefits (new deductions and proposals could sharply reduce the share of seniors taxed federally) — both were reported by AARP and other outlets as important 2026 developments [1] [4]. Reports also note legislative proposals that would entirely end federal income taxation of Social Security benefits beginning in 2026 if passed, but those remained proposals in the coverage [5] [6].
2. Who still pays federal tax on Social Security in 2026
Under current federal rules described in coverage, whether any of your benefit is federally taxable still depends on your combined/provisional income and filing status; historically up to 50% or 85% of benefits can be taxable based on those thresholds, and media summaries caution many retirees will continue to face federal taxation unless they qualify for new deductions or legislation passes [7] [8] [1]. AARP and Fidelity reported a new senior deduction that will cut the share of seniors subject to federal tax — the White House analysis cited by Fidelity estimated only about 12% of seniors would pay taxes on their benefits after the change — but that is distinct from state tax treatment [9] [1].
3. Which states tax Social Security benefits now
Multiple reputable compilations — including Bankrate, Investopedia and other outlets cited in our set — list nine states that tax at least part of Social Security benefits as of the most recent reporting: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia [2] [3] [10]. Those sources note the number is small: the majority of states (41 states plus D.C.) do not tax Social Security benefits [11] [12].
4. The big state-level shift in 2026: West Virginia
Coverage is consistent that West Virginia is phasing out its tax on Social Security benefits and will fully exempt benefits for tax year 2026, meaning residents will not owe state income tax on Social Security beginning with returns for 2026 (filed in 2027) [2] [3] [11]. That change is why multiple outlets project the count of states taxing benefits will fall to eight in 2026 [11] [13].
5. Important nuance: “taxing state” does not mean every retiree pays
Even in states that technically tax Social Security, the practical effect varies widely: some states use income thresholds, subtractions, or credits so most lower- and middle-income beneficiaries owe nothing; examples cited include New Mexico’s higher exemption thresholds, Minnesota’s income-tested subtraction tied to federal rules, and phased reductions like West Virginia’s phase-out that reached 65% exemption for 2025 [14] [15] [5]. Kiplinger and other reporting underline that many residents of “taxing” states still pay zero state tax on their benefits because of those limits [16] [14].
6. Competing perspectives and the political context
Some reporting frames 2026 changes as a big win for retirees (e.g., proposals to eliminate federal taxation and the senior deduction) while other coverage warns of offsetting fiscal tradeoffs — lawmakers contemplating raising the payroll-tax wage base for high earners to pay for exemptions, or noting that the 2017 TCJA expiration could push more retirees into taxable brackets absent offsets [6] [17]. Sources document both the potential relief for retirees and the fiscal choices legislators face if they extend broad tax breaks [6] [17].
7. What you should check for your situation
State details differ — Utah applies state ordinary income tax to the federally taxable portion, Minnesota has an “alternative method,” and New Mexico’s recent law raises exemption thresholds — so do not rely on the “nine states” label alone; consult your state revenue department or the cited guides (Kiplinger, Bankrate, Investopedia) for exact thresholds and methods [16] [2] [3]. Available sources do not provide individualized tax advice; talk to a tax advisor for your specific filing circumstances (not found in current reporting).
Limitations: this roundup uses the provided reporting set; it does not include any state-by-state statute texts or post-coverage law changes beyond the cited articles. All factual statements are drawn from the listed sources [1] [4] [2] [3] [14].