8 States Still Levy Social Security Taxes, but Many Retirees Won’t Owe Them

Quick Read

• Only eight states still tax Social Security benefits: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont.

• Many middle- and lower-income retirees avoid those state taxes because of income-based exemptions, including New Mexico’s $100,000 individual threshold.

• A $6,000 senior tax deduction is now shielding many recipients from federal Social Security taxes, though the break is temporary.

For millions of retirees, Social Security remains a vital source of income. Without those monthly payments, many older Americans would struggle to cover basic expenses.

Still, in some situations, you may not receive every dollar of your benefit intact. Social Security can be taxed at the federal level, and some states also tax benefits depending on where you live.

Even so, living in a state that taxes Social Security does not automatically mean you will owe anything. Before considering a move, it helps to understand how the rules actually work.

The number of states taxing benefits has declined

The roster of states that tax Social Security has become much smaller over time. Because the program is such an important income source, a number of states have eliminated their taxes on benefits in recent years.

West Virginia, for instance, completed its phaseout of Social Security taxation at the start of 2026, leaving taxpayers there free from the tax at all income levels.

Only eight states still tax Social Security benefits:

• Colorado

• Connecticut

• Minnesota

• Montana

• New Mexico

• Rhode Island

• Utah

• Vermont

If you live in one of these states, there is no need to assume the tax will apply to you. Retirees with middle or lower incomes often escape state taxes on Social Security thanks to exemption rules.

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In New Mexico, for example, Social Security recipients with income up to $100,000 a year do not pay taxes on their benefits. For married couples, the limit rises to $150,000.

So if you live in a state that taxes Social Security, do not assume the worst. It is worth reviewing the exemptions, because you may find that your benefits are not taxed at all.

Federal taxes on benefits still apply

State taxes are only part of the picture. Federal taxes on Social Security can also apply, and they start at relatively low income levels.

A new $6,000 senior tax deduction included in the One Big Beautiful Bill Act is currently protecting many Social Security recipients from federal taxation on their benefits. When that tax break expires in a few years, those taxes could return.

If you are concerned about taxes on your Social Security, keep in mind that average earners who rely on Social Security as their only income source are unlikely to owe taxes on their benefits. The tax is more likely to come into play when retirement income is moderate or higher.

Even so, it can be wise to speak with a tax professional before filing for Social Security. A professional can estimate what you might owe and may also help you identify other ways to reduce your tax bill.

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