How do state taxes interact with federal taxable Social Security benefits in 2026 and which states tax Social Security?
Executive summary
Federal rules will still tax up to 85% of Social Security benefits in 2026 depending on your provisional income; Congress has proposals but no definitive law change in the provided sources (provisional thresholds and percent taxable described by multiple outlets) [1] [2]. State treatment varies: most states exempt Social Security, but a small group (commonly cited as nine to 11 states) still tax benefits to some degree; West Virginia is phasing out its tax with 65% exempt in 2025 and a planned 100% subtraction by 2026 according to reporting [3] [4] [5].
1. How federal taxation of Social Security works in 2026 — the basics
Federal taxability is driven by “provisional” or “combined” income: roughly, half your Social Security plus other taxable income and certain nontaxable income determine whether up to 50% or up to 85% of benefits are included in federal taxable income; if your provisional income exceeds the higher threshold you may have up to 85% taxed — those threshold rules remain the operative framework for 2026 reporting in the sources [1] [2]. Several outlets warn that reversion of prior tax cuts and parameter changes in 2026 could push more retirees into the taxable range, increasing the number of beneficiaries who owe federal tax on benefits [5].
2. Recent/coming federal changes and legislative proposals — what reporters note
Media and policy outlets describe both administrative adjustments (COLA, payroll wage bases) and legislative proposals that could alter taxation: the SSA announced a 2.8% COLA and the 2026 Social Security wage base for payroll taxes, but that is separate from benefit taxability [6] [7]. Reporters also document bills that would raise the provisional-income thresholds (for example proposed thresholds of $34,000 individual / $68,000 joint) or even eliminate federal taxes on benefits beginning with 2026 returns if passed — but the sources describe these as proposals, not enacted law [8] [9].
3. State taxation: who still taxes benefits and how that interacts with federal rules
Most states do not tax Social Security, yet published guides differ slightly on the count: many articles cite nine states that tax benefits, while other analyses (including the Tax Foundation as reported) count up to 11 states that retain some taxation or partial taxation [3] [4] [5]. Importantly, states use their own definitions and subtractions: some follow federal taxable amounts, some offer subtractions of a fixed percentage (e.g., West Virginia’s staged subtraction), and others provide income-based exemptions that effectively shield most retirees even if the statute “technically” allows taxation [4] [10].
4. Example state policies and phase-outs reporters highlight
West Virginia is highlighted repeatedly: reporters note a phase-out where 65% of benefits were subtractable for 2025 returns (filed in 2026) and sources say West Virginia planned to fully exempt benefits by 2026 [3] [4]. New Mexico is another example reporters use: it “technically” taxes benefits but recent state law raises thresholds so many retirees pay nothing to the state [3] [10]. Other states named in various pieces as still taxing benefits to some degree include Colorado, Minnesota and Utah, though reporting varies on whether Missouri and Nebraska were phasing out taxes in 2025–2026 [5] [4].
5. What this means for retirees and planning implications
Practical takeaway from the coverage: federal tax exposure can increase in 2026 for retirees with other income or high provisional income; state exposure depends on where you live and on evolving state subtractions/exemptions, so identical federal treatment can produce different net tax bills across states [1] [4]. Several outlets recommend checking state revenue rules and consulting a tax advisor because thresholds, subtraction formulas and phase-out schedules differ and are changing in some states [2] [4].
6. Open questions and limits of current reporting
Available sources do not provide a single, definitive 2026 enumerated list of exactly which states tax Social Security and at what effective rate for every filer; counts range from nine to 11 depending on how partial subtractions and phase-outs are counted [3] [5]. Also, while multiple sources mention bills that would end federal taxation of benefits starting in 2026, the provided reporting treats them as proposals and not enacted law [8] [9].
If you want, I can (a) assemble a state-by-state checklist using the cited sources’ examples and commonly named states, or (b) draft a short list of questions to bring to a tax advisor to evaluate your federal and state exposure in 2026.