States That Tax Social Security: Just 8, Clear Limits

What each of the eight states actually charges

Three mechanisms do the work: a subtraction, an exemption, and a nonrefundable credit. Figures below are single filer / joint filer, and every row names the tax year it applies to.

State	How the break works	Full break up to	Year
Colorado	Full subtraction at 65+	No income cap at 65+; $75,000 / $95,000 at ages 55–64	2026
Connecticut	Full exemption, then a 25% cap above it	$75,000 / $100,000	2026
Minnesota	Subtraction, tapering above the cap	$84,490 / $108,320	2025
Montana	Follows the federal taxable amount	$5,500 subtraction at 65+, no income cap	2026
New Mexico	Full exemption below the cap	$100,000 / $150,000	2026
Rhode Island	Needs full retirement age and income below a cap	Indexed yearly — confirm the current figure	2026
Utah	Credit reduced $1 per $4 of income over the cap	$54,000 / $90,000	2026
Vermont	Full exemption, then a taper across $10,000	$55,000 / $70,000	2025

Sources: each state’s revenue department, plus Utah SB71. Minnesota and Vermont have enacted higher 2026 figures their published tables had not yet reflected at review — confirm before planning.

States That Tax Social Security using subtraction, exemption, and tax credit mechanisms illustrated as financial concepts — States use different mechanisms, including subtractions, exemptions, and tax credits, to reduce Social Security taxation.

Why your state tax starts with a federal number

Your state does not tax your benefit check. It taxes the slice the federal government already counted as taxable, which is why every cutoff above is measured against income rather than benefits.

🔍 How It Works: The Social Security Administration calls the deciding figure combined income — your adjusted gross income, plus tax-exempt interest, plus half your annual benefits. Half, not all.

Below $25,000 of combined income (single) or $32,000 (joint), none of your benefit is federally taxable. Between $25,000 and $34,000, or $32,000 and $44,000, up to 50% becomes taxable. Above those lines, up to 85%. That is 85% of your benefit entering taxable income — not an 85% tax rate.

Those figures set the federally taxable amount your state starts from, so benefit size matters. You can estimate your annual benefit ★, see how much of it the IRS treats as taxable ★, and check how the benefit is built from your highest 35 years of earnings ★.

📊 Data Point: For tax years 2025 through 2028, people 65 and older may claim an extra $6,000 deduction — $12,000 for a couple where both qualify — phasing out above $75,000 modified AGI ($150,000 joint). Source: IRS guidance on the enhanced deduction for seniors, 2026.

That deduction is federal only. It lowers federal taxable income and changes no state’s rule.

States That Tax Social Security and the flow from combined income to federal taxable benefits and state tax calculations — Social Security taxation can involve a federal calculation followed by state-specific exemptions, deductions, or credits.

Three checks that tell you whether you’ll owe

Is your state one of the eight? If not, you owe no state tax on benefits — though the federal layer still applies.
Does the cutoff match your filing year? These thresholds move most years. A 2025 figure applied to a 2026 return is the most common error on this topic.
Does age change your answer? Colorado splits at 65. Montana’s subtraction starts at 65. Rhode Island requires full retirement age ★ before its exemption applies at all.

Your adjusted gross income is what gets measured, so required minimum distributions and other withdrawals — not your benefit — usually decide the outcome. Check the result against an income tax estimate and this year’s brackets and standard deduction.

✅ Action Step: Ask a CPA or Enrolled Agent licensed in your state: “If I withdraw an extra $10,000 this year, does that push me past my state’s Social Security cutoff, and what does it cost?”

A worked example: what a partial exemption looks like

Crossing a threshold rarely costs you everything at once. Vermont publishes its own phase-out formula, and running it shows why.

A single Vermont filer has $60,000 AGI. Of a $35,000 benefit, $20,000 is federally taxable. Vermont’s 2025 single taper runs from $55,000 to $65,000, so: $65,000 − $60,000 = $5,000; $5,000 ÷ $10,000 = 50%; 50% × $20,000 = $10,000 exempt.

Half the taxable benefit still escapes Vermont tax. At $64,000 AGI the exemption would fall to 10% — a slope, not a cliff. Test your own position by modelling total retirement income ★ and a larger 401(k) withdrawal.

Source: Vermont Department of Taxes, Social Security Exemption, tax year 2025 figures.

States That Tax Social Security example showing Vermont Social Security exemption phase-out from $55,000 to $65,000 — Vermont illustrates how a Social Security tax exemption can gradually phase out as income rises.

Four mistakes that cost retirees real money

Using last year’s number. Most of these cutoffs are inflation-adjusted, so a figure that was right in April can be wrong in January.

Assuming an exempt state means no tax. Forty-two states leave benefits alone. The federal layer does not.

Reading the $6,000 senior deduction as a state exemption. It is a federal deduction, temporary, and income-limited.

Not claiming the break. None of these apply automatically. Colorado uses Schedule DR 0104AD, Minnesota Schedule M1M, Vermont Form IN-112, Utah Form TC-40A.

⚠️ Costly Mistake: A one-off income event — a home sale, a large capital gain, or a Roth conversion timed badly — can lift your AGI over a cutoff for a single year and tax benefits that were exempt the year before and the year after.

What’s changed, and what’s only a proposal

Enacted: West Virginia’s deduction reached 100% for 2026. Colorado extended its full subtraction to ages 55–64 under the income caps from 2025. Utah raised its credit cutoffs from 2025.

Not law: a Rhode Island bill removing the age requirement had passed only the Senate at review. Montana’s 2025 repeal attempt failed. Neither changes what you file today.

If you’re comparing states, benefits are one line on a longer list — property tax often outweighs them, and what retirees have actually saved by age sets the real stakes. The IRS’s 2026 guidance for seniors covers the federal side.

States That Tax Social Security in 2026 showing enacted tax changes compared with proposed legislation — A visual distinction between Social Security tax changes that are enacted for 2026 and legislation that remains only a proposal.

Common questions

1. Which states tax Social Security benefits?

Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont — eight in total for 2026. Confirm your own state’s current rule before filing.

2. Does West Virginia still tax Social Security?

No. Its deduction reached 100% for the 2026 tax year, so benefits are now fully exempt there.

3. If my state doesn’t tax benefits, do I still owe federal tax?

Possibly. Up to 85% of your benefit can be federally taxable depending on combined income, whatever state you live in. Ask a CPA to confirm.

4. What income figure do states measure?

Most use adjusted gross income, not your benefit amount. Withdrawals and other income usually decide whether you cross the cutoff. Confirm with a tax professional.

5. Does the $6,000 senior deduction cancel state tax on benefits?

No. It reduces federal taxable income for people 65 and older and changes no state’s Social Security rule. Verify eligibility with a CPA.

6. At what income does Minnesota tax Social Security?

Its 2025 full subtraction ran to $84,490 single and $108,320 joint, tapering above those figures. Confirm the current-year number first.

7. Does Colorado tax Social Security after 65?

Not in practice. Filers 65 and older subtract the entire federally taxable amount, with no income cap. Claim it on Schedule DR 0104AD.

8. How does Utah’s Social Security credit work?

A nonrefundable credit offsets the tax, cut by $1 for every $4 of income above $54,000 single or $90,000 joint. Confirm with a CPA.

9. Is Vermont’s exemption all-or-nothing?

No. Above the cutoff it tapers across $10,000 of income, so part of the benefit stays exempt. Check the current year’s band.

10. Does Rhode Island’s exemption depend on my age?

Yes. You must have reached full retirement age and sit under an annually indexed income cap. Confirm both with a tax professional.

11. Should I move states to avoid tax on my benefits?

Rarely on its own. Property tax, sales tax and domicile rules often outweigh the saving. Ask a CPA licensed in both states.

Your next step

Find your state in the table, note the year on that row, and confirm the figure with your state’s revenue department before planning around it. Then ask a CPA or Enrolled Agent whether this year’s withdrawals put you near the line.

Written byView profile

Sameer Patel — Founder & Editor

Research, drafting and original analysis

Contributor at Finance Authority Hub.

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The content on Finance Authority Hub is provided for general informational and educational purposes only and should not be considered personalized financial, investment, tax, legal, or professional advice. Financial decisions depend on your individual goals, income, risk tolerance, location, and regulatory situation. Before acting on any information, strategy, estimate, or calculator result, consult a qualified licensed professional who can evaluate your specific circumstances.

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Which states tax Social Security in 2026