As of 2026, only eight states still tax Social Security benefits, and the rules in each can significantly change what retirees actually keep. I will walk through those eight states, explain how much they may take from you, and highlight key thresholds that determine whether your Social Security is taxed at all.
1) Colorado
Colorado appears on every list of States That Still Tax Social Security, and the state does tax a portion of Social Sec income for many retirees. Reporting on States That Still notes that Colorado does tax a portion of Social Sec, although it also offers age‑based and income‑based subtractions that can shield some or all benefits. The exact impact depends on your overall taxable income, filing status, and whether you qualify for Colorado’s retirement income exclusions.
For middle‑income retirees, that means Social Security can push more income into taxable territory, especially when combined with 401(k) withdrawals or part‑time wages. Because state income tax is layered on top of federal rules that already tax up to 85% of benefits, Colorado residents need to model how each extra dollar of retirement income affects both systems. I find that careful timing of withdrawals and Roth conversions can meaningfully reduce what Colorado ultimately takes from you.
2) Connecticut
Connecticut is another state where Social Security benefits can still face state income tax in 2026, particularly for higher earners. Coverage of retirees in these eight states explains that Connecticut remains on the list of places where Social Security is not fully exempt, even though lower and moderate income households may qualify for substantial relief. The state uses income thresholds so that only those above specific adjusted gross income levels see their benefits pulled back into the tax base.
Because Connecticut also taxes other retirement income, such as pensions and IRA withdrawals, the combined effect can be significant for affluent retirees. Those with large required minimum distributions may find that crossing a threshold suddenly exposes a bigger share of their Social Security to state tax. I view this as a strong incentive for Connecticut residents approaching retirement to consider strategies like earlier Roth conversions or relocating before claiming benefits if they want to limit how much the state can take.
3) Minnesota
Minnesota still taxes Social Security, but it has created targeted relief through a Social Security Benefit Subtraction. The state’s own guidance describes a Simplified Method that allows taxpayers with adjusted gross income below $108,320 for Married Filing Jointly to subtract a set amount of Social Security from Minnesota taxable income. Above that level, the subtraction phases out as AGI rises.
Analysts who track Social Security taxation list Minnesota among the eight states still taxing benefits in 2026, but they also stress that many lower income retirees will owe nothing once the subtraction is applied. For couples near the $108,320 Married Filing Jointly threshold, however, even modest extra income can reduce the subtraction and increase state tax on benefits. I see this as a classic “cliff” problem, where careful planning around capital gains, part‑time work, or large one‑time withdrawals can prevent an unexpected jump in Minnesota tax.
4) Montana
Montana Social Security benefits tax rules keep the state on every 2026 list of places that still tax Social Security. According to detailed state comparisons, Montana Social Security is taxed within a broader income tax system where Montana’s income tax rate is 5.65% on income over $95,000 ($47,500 for single filers). That structure means higher income retirees can see a meaningful slice of their benefits taxed at relatively steep marginal rates.
Because Montana uses income thresholds similar to the federal formula, retirees with substantial IRA or pension income are most likely to feel the impact. Once combined income crosses the state’s limits, up to 85% of Social Security can become taxable at Montana’s 5.65% top rate. I find that this makes Montana less attractive for high‑income retirees than neighboring states that have eliminated Social Security taxes, even though lower income residents may still avoid state tax on their benefits.
5) New Mexico
New Mexico continues to tax Social Security in 2026, although it has gradually expanded exemptions for lower and middle income residents. Analysts who track where retirees risk losing some of their Social Security checks consistently list New Mexico among the eight states that still tax benefits. The state uses income thresholds so that only those above certain adjusted gross income levels see their Social Security pulled into the tax base, while others receive partial or full exemptions.
For retirees with modest savings, these exemptions can largely shield benefits, but higher earners may still face a noticeable state tax bill. Because New Mexico also taxes other retirement income, the combined effect can be substantial for professionals who retire with large pensions or investment portfolios. I see this as a reminder that retirees considering New Mexico for its climate or cost of living should run detailed projections on how state tax rules will interact with their Social Security and other income streams.
6) Rhode Island
Rhode Island remains on the short list of states that tax Social Security, even as many neighbors have moved to exempt benefits entirely. Coverage of retirees in these eight states notes that Rhode Island still includes Social Security in taxable income for residents whose earnings exceed specific thresholds. The state has created exemptions for lower income retirees, but those with higher adjusted gross income can see a significant share of their benefits taxed.
Because Rhode Island also has relatively high overall tax burdens, the inclusion of Social Security can be a deciding factor for residents weighing whether to stay in retirement. For example, a couple with substantial IRA withdrawals and part‑time wages may find that crossing the state’s income threshold suddenly exposes most of their benefits to tax. I view Rhode Island’s approach as part of a broader regional pattern in which some Northeastern states continue to rely on taxing retirement income even as others pivot toward more retiree‑friendly policies.
7) Utah
Utah Social Security rules keep the state on the 2026 list of places that still tax benefits, but the structure is somewhat different from others. Detailed comparisons explain that Utah Social Security is taxed within a system that uses a flat 4.50% tax rate, while also offering a Social Security benefit credit that phases out at higher incomes. That means many lower and moderate income retirees effectively pay little or nothing on their benefits.
For higher income households, however, the phaseout of Utah’s credit can expose a growing share of Social Security to the full 4.50% rate. Because the state’s flat tax applies to other income as well, retirees with large 401(k) withdrawals or business income may feel the combined effect. I find that Utah’s structure rewards careful income management, such as spreading Roth conversions over several years to avoid losing the credit in a single high‑income year.
8) Vermont
Vermont rounds out the eight states that still tax Social Security in 2026, using income thresholds and partial exemptions similar to several others on this list. Analyses of States that still tax Social Security emphasize that, as of 2026, only eight states maintain Social Security benefit taxes, and Vermont is one of them. The state’s rules generally protect lower income retirees while taxing benefits for those with higher adjusted gross income.
Because Vermont also has relatively high overall income tax rates, the inclusion of Social Security can significantly affect take‑home retirement income for professionals and business owners who retire there. For residents who are close to the state’s exemption thresholds, even modest extra income from part‑time work or capital gains can trigger tax on benefits. I see Vermont’s approach as a key factor retirees should weigh alongside housing costs and health care access when deciding whether to remain in the state after claiming Social Security.
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*This article was researched with the help of AI, with human editors creating the final content.
Nathaniel Cross focuses on retirement planning, employer benefits, and long-term income security. His writing covers pensions, social programs, investment vehicles, and strategies designed to protect financial independence later in life. At The Daily Overview, Nathaniel provides practical insight to help readers plan with confidence and foresight.
