Key facts
- Eight states will continue to tax Social Security benefits in 2026.
- Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont are the states that tax Social Security.
Eight U.S. states will continue to tax Social Security benefits in 2026, though most offer exemptions based on age or income. Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont are the states with these taxes. Many states have repealed or phased out these taxes in recent years.
Eight U.S. states will continue to tax Social Security benefits in 2026, although many provide exemptions based on age or income. The states are Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. In Colorado, higher-income retirees may still have a portion of their benefits taxed. Connecticut taxes benefits for retirees whose income exceeds specific thresholds. Minnesota taxes federally taxable Social Security benefits but offers a subtraction for those below certain income levels. Montana generally follows federal rules, with income thresholds determining tax liability. New Mexico includes Social Security in taxable income but offers deductions. Rhode Island taxes benefits for some residents based on age and income thresholds. Utah taxes benefits similarly to federal rules but offers tax credits that phase out at higher incomes. Vermont taxes benefits, with exemptions available for many lower-income retirees. Lawmakers have increasingly recognized that many retirees depend on Social Security for basic expenses, leading several states to repeal or phase out these taxes over the past decade.
Retirees in these eight states need to be aware of specific tax rules and potential exemptions to accurately plan their retirement income and budget effectively, as these taxes can reduce the net amount of Social Security benefits received.