Most states do not tax Social Security, but a small group still does. If you live in one of them, your 2026 retirement income could look very different from what you expect, and in some cases, that difference can affect whether you retire comfortably or face higher bills.

Below, we break down the states that still tax Social Security and explain their 2026 rules, including income thresholds and tax rates.

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1. Colorado

Colorado now largely exempts Social Security from state taxes. Under rules that began in 2025 and carry into 2026, many older residents owe no state tax on their federally taxable Social Security.

Here's how it works:

Age 65 and older: You can subtract 100% of your federally taxable Social Security.

Ages 55–64: You can also subtract 100% if your federal AGI is under $75,000 (single) or $95,000 (married filing jointly).

Higher-income ages 55–64: You can still subtract up to $20,000 of benefits.

Under 55: No special subtraction applies.

After any subtraction, Colorado taxes the remaining income at a flat 4.4% rate.

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2. Connecticut

Connecticut still taxes Social Security on paper, but most retirees owe nothing in practice. In 2026, you pay no state tax on federally taxable Social Security if your federal AGI stays under:

$75,000 for single filers

$100,000 for married couples filing jointly

Above the thresholds, Connecticut taxes up to 25% of your Social Security. Any taxable portion is treated as ordinary income and taxed at regular state rates, which top out at about 6.99%.

3. Montana

Montana taxes Social Security as ordinary income, but offers a small break for older retirees.

For 2026, taxpayers 65 or older can subtract $5,660 from income, which can offset federally taxable Social Security. If you are under 65, there is no special subtraction, and all taxable benefits are subject to state tax.

Montana's income tax rates are 4.7% at lower levels and 5.65% above the top bracket, which begins around $47,500 for single filers. As a result, many retirees over 65 owe only a few hundred dollars in state tax on Social Security, while younger retirees often owe more.

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4. New Mexico

New Mexico offers one of the most generous Social Security exemptions in the country. In 2026, you owe no state tax on Social Security if your income stays under:

$100,000 for single filers

$150,000 for married couples filing jointly

If your income exceeds the threshold, only the taxable portion of your benefits is subject to New Mexico's regular income tax rates, which range from 1.7% to 5.9%.

5. Rhode Island

Rhode Island exempts Social Security only for retirees who meet both an age test and an income test. You must be at full retirement age, usually 66 or 67, to qualify.

If you meet the age rule, you can exclude 100% of federally taxable Social Security only if your federal AGI is below the state's limits. For tax year 2025, those cutoffs are about $107,000 for single or head of household filers and $133,750 for married couples filing jointly. The thresholds adjust each year.

Once your income rises above the threshold, Rhode Island taxes the federally taxable portion of Social Security as ordinary income, at rates up to 5.99%.

6. Vermont

Vermont taxes Social Security for higher-income retirees, with exemptions for lower earners.In 2026, all Social Security benefits are exempt for incomes under $65,000 (single) or $75,000 (joint).

Above those levels, the exemption phases out, and higher earners may have all federally taxable benefits subject to Vermont tax at rates up to 8.75%.

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7. Utah

Utah taxes Social Security at a 4.65% flat rate, but most retirees avoid the tax through a refundable credit.

You pay Utah tax on the same portion of Social Security taxed federally, then apply the Social Security Benefits Credit:

Full credit up to $45,000 (single) or $75,000 (married filing jointly)

$37,500 limit for married filing separately

The credit phases out above those levels

At lower income levels, the credit fully offsets the tax, resulting in no Utah tax on Social Security.

8. Minnesota

Minnesota taxes Social Security only if it is taxed federally, and generous exemptions mean many retirees pay no state tax on their benefits.

For 2026 filings, all federally taxable Social Security is exempt if AGI is:

$108,320 or less (married filing jointly)

$84,490 or less (single or head of household)

Above the thresholds, the subtraction phases out gradually:

For joint filers, every $4,000 over the limit reduces the subtraction by 10%

For married filing separately, the phaseout starts at $54,160 and reduces faster

Any portion that becomes taxable is taxed at Minnesota's regular income tax rates, which can reach 9.85% at the top end.

West Virginia drops off the list in 2026

West Virginia will fully exempt Social Security starting with the 2026 tax year. The state has been phasing out its tax on federally taxable benefits over several years, and the exemption reaches 100% in 2026. That means all retirees, regardless of income, will pay no West Virginia state tax on their Social Security benefits.

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Bottom line

Most states do not tax Social Security at all. Even in the eight states that do, many retirees end up owing nothing if their income stays below the exemption thresholds.

The rules are detailed and can change from year to year, so it pays to check your state's current law before you file to avoid money mistakes. A little advance planning can go a long way toward keeping more of your retirement paycheck in your pocket.

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Source: “AOL Money”