Seven States Will Still Tax Social Security Benefits in 2026

Major Changes Coming to Social Security Taxation

The landscape for Social Security taxation is shifting dramatically in 2026, with West Virginia joining the growing list of states that will stop taxing Social Security benefits . This leaves Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont as the only remaining states that tax Social Security benefits , though lower-income retirees are often exempt .

The trend toward eliminating state taxes on Social Security has accelerated in recent years. Missouri, Kansas and Nebraska completely eliminated their taxes on Social Security benefits beginning in 2024 , joining a movement that recognizes the financial pressures facing retirees. In 2026, 41 states do not tax Social Security benefits , creating a stark divide in how states treat retirement income.

For the 74 million Americans who receive Social Security , understanding where they live makes a significant difference. According to the Pew Research Center, 63% of beneficiaries say Social Security accounts for at least half of their income, while 27% depend on it as their only source of income .

State-by-State Tax Rules Vary Dramatically

The seven remaining states that tax Social Security benefits each have different rules and income thresholds. Connecticut doesn't tax Social Security benefits for single filers with adjusted gross income under $75,000 or joint filers under $100,000 . If taxpayers exceed those thresholds, no more than 25% of Social Security benefits are taxed .

New Mexico provides some of the most generous exemptions, with single filers earning up to $100,000 per year and joint filers earning up to $150,000 per year avoiding state taxes on their Social Security benefits entirely . Vermont offers full exemptions for married couples filing jointly with AGI of $70,000 or less and single filers with AGI of $55,000 or less .

Utah taxes all taxable income at a flat 4.50% tax rate , though it provides credits to offset Social Security taxes for many retirees. Rhode Island exempts Social Security benefits from state income tax for retirees who have reached full retirement age and meet income requirements .

Federal Tax Relief on the Horizon

Beyond state changes, federal tax relief for Social Security beneficiaries is expanding in 2026. A new "senior bonus deduction" introduced in the One Big Beautiful Bill Act allows filers 65 and older to claim an additional $6,000 , whether they itemize or take the standard deduction. To qualify, individuals must be at least 65 with a modified adjusted gross income under $175,000, while joint filers must both be at least 65 with combined income under $250,000 .

This means older Americans filing their 2025 tax returns can write off as much as $23,750 for single filers, and joint filers over 65 could claim as much as $46,700 . The expanded breaks under Trump are set to last through 2028 .

Strategic Planning for Retirees

The changing tax landscape creates both opportunities and challenges for retirement planning. The new federal deduction of up to $6,000 can help keep retirees below income thresholds where benefits become taxable . For those in states that still tax Social Security, relocating to a state with no tax on Social Security benefits may reduce state-level taxation .

The momentum toward eliminating Social Security taxes appears likely to continue. States have been progressively doing away with the Social Security tax, and there's a chance more states will jump on the bandwagon . This trend reflects growing recognition that taxing Social Security benefits places an unfair burden on retirees who already face rising healthcare costs and fixed incomes.

As these changes take effect, retirees should carefully review their state's specific rules and consider how federal tax changes might affect their overall tax burden. The combination of fewer states taxing benefits and expanded federal deductions represents the most significant shift in Social Security taxation policy in decades.