Only eight states still tax Social Security benefits in 2026, and each uses its own income tests and formulas to decide what retirees owe. Key Points For 2026 from Dec reporting state that Only eight jurisdictions, including Colorado and Connecticut, still reach into Social Security checks. Understanding which states tax benefits and how they calculate liability helps retirees estimate their after tax income and decide whether a move could meaningfully lower their overall tax bill.
1) Colorado
Colorado continues to tax Social Security benefits in 2026, although many retirees qualify for relief. Reporting on Colorado Social Security explains that the state includes benefits in taxable income but then allows a sizable retirement income subtraction that can wipe out the tax for lower and middle income seniors. As of 2026, eight states tax Social Security benefits, and Colorado is one of them, according to a summary that notes that As of this year, eight states tax Social Security while Some offer exemptions based on adjusted gross income (AGI). That structure means higher income retirees in Colorado may still owe state tax even when neighbors with similar benefit amounts do not.
Because Colorado also taxes other retirement income, residents need to look at their full AGI, not just their monthly check. Guidance on Colorado and separate retirement tax round ups stress that AGI, or Adjusted gross income, is the key trigger for many state exemptions. Retirees who delay claiming benefits while drawing from IRAs may push their AGI higher and lose some or all of the Colorado subtraction. The stakes are significant for households considering a move within the Mountain West, since neighboring states with no Social Security tax can deliver a higher effective income from the same federal benefit.
2) Connecticut
Connecticut also remains on the short list of states that still tax Social Security in 2026. A Dec summary of Key Points For 2026 notes that Only eight states tax Social Security and explicitly lists Colorado and Connecticut among them. Detailed guidance on Connecticut Social Security rules explains that the state exempts benefits for residents below specific AGI thresholds, while higher income retirees see a portion of their benefits pulled into the state income tax base. That design mirrors the federal model, where combined income determines whether up to 85 percent of benefits become taxable.
For retirees comparing New England options, the presence of a Social Security tax in Connecticut can be a deciding factor. While some may still pay little or nothing because their AGI sits under the exemption line, those with substantial pension payments, required minimum distributions or ongoing wages can face a noticeable state bill on top of federal tax. That extra layer of taxation can influence where high earning professionals choose to retire, especially when nearby states fully exempt Social Security benefits and sometimes offer more favorable treatment of other retirement income.
3) Minnesota
Minnesota remains in the group of eight states that tax Social Security benefits in 2026, although lawmakers have periodically debated broader exemptions. Earlier guidance on which states tax benefits identified Minnesota among Nine states that historically taxed some or all Social Security income, alongside Colorado and Connecticut. More recent summaries that state that As of 2026, eight states tax Social Security indicate that Minnesota is still on the list, but with income based exclusions that shield many lower income retirees.
Under Minnesota’s approach, benefit taxation interacts with other retirement income and wages, so the combined effect can be complex. Retirees with modest Social Security and little else may see no state tax, while those with larger 401(k) withdrawals or public pensions can have a portion of their benefits included in taxable income. Because the state also has relatively high marginal tax rates, the dollars at stake can be meaningful for middle and upper middle income households. That reality has kept pressure on policymakers to weigh the cost of further exemptions against the goal of keeping older residents from relocating to states with no Social Security tax.
4) Montana
Montana is another state that still taxes Social Security in 2026, using a structure that resembles the federal rules but with its own income thresholds. Earlier overviews of state taxation of benefits listed Montana among Nine states where some portion of Social Security could be taxed, alongside New Mexico and Rhode Island. More recent mapping of which States tax Social Security income confirms that Some states tax Social Security while others do not, and Montana remains on the taxing side in 2026.
Montana’s formula can pull a relatively high share of benefits into taxable income for residents whose AGI climbs above the state’s threshold, especially when combined with other retirement income. Because the state also taxes private pensions and IRA withdrawals, retirees with sizable nest eggs can face a layered burden that includes federal income tax, state income tax on benefits and state tax on other distributions. For those weighing a move within the northern Rockies, that combination can make Montana less attractive than nearby states that either exempt Social Security entirely or offer broader deductions for retirement income.
5) New Mexico
New Mexico has adjusted its Social Security tax rules in recent years but still taxes some benefits in 2026. A bill analysis labeled Description explains that this legislation amends the exemption for Social Security income and keeps the existing structure in which individuals with certain adjusted gross income levels qualify for a full or partial exemption. The same document clarifies that as under current law, individuals with the following adjusted income thresholds retain favorable treatment, which means higher income residents may still owe tax on a portion of their benefits. That tiered approach reflects New Mexico’s effort to balance revenue needs with relief for lower income seniors.
Coverage of retirement affordability notes that New Mexico increased the income threshold for state tax on Social Security and that this threshold is adjusted every year for inflation. That change reduces the number of retirees who actually pay the tax, even though the statute still allows taxation of benefits. For residents, the key figure is AGI, or Adjusted gross income, a term that tax guides describe as the income measure that controls many deductions and credits. Retirees whose AGI rises because of part time work or large retirement account withdrawals can find themselves unexpectedly above New Mexico’s exemption line and facing a state bill on benefits they assumed were fully protected.
6) Rhode Island
Rhode Island continues to tax Social Security in 2026, although it offers income based relief that shields many retirees. Earlier summaries of Nine states that may tax Social Security Benefits listed Rhode Island alongside Utah and Vermont, and later updates that state that in 2026, only eight states tax Social Security indicate that Rhode Island remains in the group while one of the earlier nine has dropped off. State specific guidance explains that Rhode Island exempts benefits for taxpayers whose income falls below certain thresholds, while higher income residents see some of their Social Security included in taxable income.
For retirees in the Northeast, Rhode Island’s policy sits between neighbors that fully exempt benefits and those that tax them more broadly. Residents with modest Social Security and limited other income often qualify for the exemption, which can make the state competitive for lower and middle income seniors. However, those with significant IRA withdrawals, rental income or ongoing wages can cross the income threshold and lose the exemption. That mix of partial relief and potential exposure encourages many Rhode Island households nearing retirement to model their expected AGI over several years before deciding whether to stay or relocate.
7) Utah
Utah is part of the eight state group that still taxes Social Security in 2026, but it has moved toward targeted credits that reduce the impact for many seniors. Earlier reporting that counted Nine states taxing benefits in 2025 named Utah among the jurisdictions that may tax Social Security Benefits, and subsequent updates explain that in 2026, only eight states continue to do so. Utah’s current framework generally includes Social Security in taxable income but offers nonrefundable credits that phase out as income rises, effectively shielding lower and some middle income retirees from paying state tax on their benefits.
Residents evaluating Utah’s cost of living need to consider how these credits interact with their broader income picture. The state also taxes most other forms of retirement income, so retirees with large 401(k) balances or business income can see their credits reduced or eliminated. For households with moderate means, however, Utah’s credits can significantly soften or eliminate the tax on Social Security. That balance helps explain why some retirees remain in Utah despite the formal presence of a Social Security tax, while higher income households sometimes compare the state with nearby jurisdictions that do not tax benefits at all.
8) Vermont
Vermont rounds out the list of eight states still taxing Social Security in 2026, using a structure that combines exemptions and income phaseouts. Guidance on Vermont Social Security benefits tax explains that the state fully exempts benefits for single filers with income up to 55,000 dollars and for joint filers with income up to 79,999 dollars, with partial exemptions above those levels. Seniors living in Vermont can therefore avoid state tax on their Social Security if their income does not exceed 55,000 dollars as a single filer, but those with higher income see a growing share of their benefits included in taxable income.
That design places Vermont among the states that still tax Social Security while trying to protect lower income retirees. For residents with substantial pensions or investment income, the thresholds can feel relatively low, which means a meaningful portion of their benefits may be taxed at Vermont’s marginal rates. The presence of income based exemptions also means that retirees have some planning levers, such as smoothing large withdrawals over several years to stay under the cutoff. Those choices can materially affect how much Vermont households owe on their Social Security in any given tax year.
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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.
