Which States Still Tax Social Security Benefits: The Shift in State Tax Policy

While the majority of Americans can receive their Social Security benefits without facing federal taxes, state-level taxation of these retirement payments remains a complex and evolving landscape. As of 2026, the number of states that tax social security benefits continues to shrink, with lawmakers across the country reconsidering whether these levies are fair to retirees who have already contributed throughout their working lives.

The movement to eliminate Social Security taxation at the state level has gained significant momentum in recent years. West Virginia completed its phase-out by 2026, fully eliminating taxes on benefits, while Kansas took action last year to do the same. This trend reflects a broader recognition that state taxes on social security can substantially reduce retirement income for beneficiaries who are already managing higher living costs. President Trump promised during his campaign to end federal taxation of Social Security—payments that currently affect about 40% of the roughly 70 million American recipients—though Congress’s involvement would be necessary to implement such a change at the federal level.

The Economic Case for Phasing Out Social Security Taxes

Why are states moving away from taxing social security? Supporters of elimination argue that these taxes unfairly diminish benefits that Americans earned and deserve to receive in full. With inflation having hit retirees particularly hard in recent years, many beneficiaries are struggling with basic living expenses. Research suggests that nearly one-third of retired Americans have considered returning to work due to financial pressure. Advocates contend that ending state taxation would provide meaningful relief during what many describe as an ongoing cost-of-living challenge.

States Still Taxing Social Security in 2026

Nine states maintained Social Security taxation laws as of 2025-2026, though several are in various stages of reconsidering these policies. Here’s where states that tax social security stand:

Colorado imposes a 4.4% state income tax, but only select Social Security recipients pay taxes on their benefits. Residents aged 65 and older can deduct Social Security payments for tax purposes. Those between 55 and 64 may qualify for deductions if their income falls below certain thresholds, while some younger beneficiaries face taxation on their benefits.

Connecticut takes a limited approach, requiring state taxes on Social Security benefits only when adjusted gross income exceeds $75,000 for individuals or $100,000 for couples. Even for those required to pay, 75% of benefits remain exempt from state taxation.

Minnesota allows married couples filing jointly to avoid taxation if income stays below $108,320 (single filers face a $84,490 threshold). Higher-income residents are subject to tax, though lawmakers in the state are actively supporting legislation to eliminate taxation entirely.

Montana taxes residents whose income surpasses $32,000 for married couples or $25,000 for individuals, though some deductions are available to higher earners. An attempt in 2023 to end this taxation failed to advance.

New Mexico offers substantial relief: residents earning under $100,000 (single) or $150,000 (married) can fully deduct Social Security from taxable income. Those above these thresholds face income tax rates ranging from 1.7% to 5.9%, including on their Social Security benefits.

Rhode Island exempts beneficiaries who have reached full retirement age and maintain income below specified limits ($104,200 for single filers). Other retirees pay income taxes between 3.75% and 5.99% on their benefits.

Vermont does not tax Social Security for those earning under $50,000 (individuals) or $65,000 (married couples). Above these thresholds, taxation increases gradually, becoming fully applicable at $60,000 for individuals and $75,000 for couples. Over 60 legislators, including Democrats and Republicans, are pushing to raise these income thresholds.

Utah maintains taxation for some households earning over $90,000. Governor Spencer Cox championed an effort to eliminate all Social Security taxation, calling it his “most popular proposal in years” due to potential annual savings of nearly $1,000 for affected households. Currently, Social Security benefits face taxation at Utah’s 4.55% rate, though lower-income households receive a complete credit offsetting this tax. While the legislature did not fully advance the governor’s elimination plan, it did increase the income threshold from $75,000 to $90,000—a modest step toward broader tax relief.

West Virginia has largely resolved this issue: higher-earning beneficiaries saw their taxes reduced by 65% under legislation signed last year, with complete phase-out scheduled for 2026.

The Ongoing Debate Over Fairness and Relief

The question of whether states should tax social security remains contentious. Supporters of elimination emphasize that these taxes effectively reduce retirement security at a time when many seniors face financial strain. The political momentum is shifting: recent legislative successes in Kansas and West Virginia demonstrate that elimination is achievable when there’s sufficient public and political support.

Looking ahead, additional states may follow this trend. The phrase “states that tax social security” may describe fewer jurisdictions each year as public pressure and cost-of-living concerns drive further policy reconsideration.