Which states continue to tax Social Security benefits in 2026 and what exemptions apply?
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Executive summary
Nine states still tax at least some Social Security benefits as of the 2025 tax year, though the rules differ widely by state and income; West Virginia is completing a legislated phase‑out so it will stop taxing benefits in 2026, leaving eight continuing taxing states (Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont) [1] [2] [3]. What matters most for retirees is not the headline list but the exemptions and income thresholds each state applies — many low‑ and middle‑income beneficiaries will owe nothing even in taxing states [4] [5].
1. Which states still tax Social Security benefits in 2026 — the short list and the West Virginia phase‑out
Multiple financial outlets and state research note the same roster: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont are the states that continue to subject at least some Social Security to state income tax; West Virginia had been counted among taxing states but is phasing out taxation so that Social Security is fully exempt beginning in 2026, reducing the count to eight taxing states going forward [1] [2] [3] [5].
2. Colorado and Connecticut — age and income‑based carve‑outs, not blanket taxation
Colorado has moved toward broader exclusions: residents 65+ already could exclude federally taxable Social Security income and the exemption expanded to some younger taxpayers based on AGI caps, so many recipients pay nothing under state law despite the state appearing on the taxing list [1] [6]. Connecticut provides a full exemption up to specified AGI caps ($75,000 single, $100,000 married filing jointly) and allows only limited taxation above those thresholds (up to 25% of benefits may be taxed) — again, design makes the tax bite depend on total income [1].
3. Minnesota, Montana and Utah — phased or federal‑style treatments
Minnesota applies an income‑tested subtraction: low‑ and moderate‑income filers can fully exclude federally taxable benefits below state thresholds, with phased partial taxation above those levels; by legislative design a minority of recipients actually pay state tax on benefits [7] [5]. Montana largely follows the federal taxable‑benefit calculation and offers limited deductions (recently a $5,660 deduction was noted for residents over 65), so treatment can resemble federal rules more than an outright state tax on every beneficiary [8] [4] [9]. Utah follows the federal taxability regimen — meaning up to 85% of benefits can be federally taxable and Utah applies its regular income tax to that taxable amount — but states’ deductions and credits can blunt the effect [4].
4. New Mexico and Rhode Island — generous thresholds and age rules that exempt many recipients
New Mexico “technically” taxes Social Security but sets high income thresholds so most retirees pay nothing; for example, residents with AGI beneath generous caps (examples cited include up to $100,000 thresholds in some reporting) are exempt and only higher earners face state tax [8] [10]. Rhode Island exempts benefits for recipients at full retirement age with AGI below defined ceilings (reported thresholds include roughly $107,000 single / $133,750 joint), making its apparent inclusion on the taxing list misleading for large numbers of beneficiaries [10].
5. Vermont and the practical effect: rules matter more than a state’s presence on the list
Vermont appears on lists of taxing states but provides full exemptions for retirees who meet income criteria, so many Vermont residents receive no state tax on Social Security even though the state statute permits taxation in higher‑income situations [8]. Across the board, reporting emphasizes that presence on a “taxing” list does not automatically translate into a tax bill — exemptions, age tests, and income thresholds determine who actually pays [4] [5].
6. How to read this: phase‑outs, thresholds, and why the count changes
Recent legislative moves (Kansas, Missouri and Nebraska eliminated taxes earlier; West Virginia’s phase‑out completes in 2026) have steadily reduced the number of taxing states and will likely keep the list fluid; therefore the operative question for a retiree is whether their state’s exemptions and AGI thresholds apply to them, not merely whether the state “taxes Social Security” on an alphabetical list [3] [11] [12]. Reporting from state research offices, Kiplinger, Fidelity and national outlets converges on the same practical guidance: check state income limits, age rules, and subtraction or deduction amounts to determine actual liability [8] [7] [6].