Want a Tax-Friendly Retirement? These 41 States Don’t Tax Social Security Benefits
By Personal Finance DeskUpdated Nov 10, 2026
Key takeaways
- For tax year 2026, only eight states may tax Social Security benefits, after West Virginia finished its phaseout.
- Eight states, including Florida, Texas and Nevada, have no individual income tax on pensions, IRA withdrawals or wages.
- A state that exempts Social Security can still tax pensions, IRA and 401(k) withdrawals, annuities and investment income.
- Federal tax can reach up to 85% of benefits, and tax-exempt bond interest counts toward combined income.
Social Security benefits escape state income tax in most of the country. For tax year 2026, only eight states may tax them: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont. The other 42 states and Washington, D.C., leave the benefits alone. Even in the eight taxing states, many retirees owe nothing because exemptions, deductions or credits cover benefits below set income levels.
Supplemental Security Income (SSI) is a separate program. It is not taxable income, because it is a needs-based payment rather than an earned benefit. The state rules below concern Social Security retirement, survivor and disability benefits, not SSI.
Why the Count Is 41 or 42 States
The headline figure of 41 states dates from when nine states taxed benefits. West Virginia was the ninth. It phased out its tax on Social Security over several years and finished the phaseout for tax year 2026. West Virginians can now deduct federally taxable Social Security benefits in full at every income level and filing status. With West Virginia added, 42 states plus D.C. do not tax the benefits. Older lists that mention “nine states” describe the earlier rules.
The Different Kinds of States That Don’t Tax Social Security
The 42 non-taxing states fall into two groups, and the difference matters once you count income beyond Social Security.
States with no individual income tax. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming do not tax individual income at all. Social Security, pensions, IRA and 401(k) withdrawals, and wages are all outside state income tax. There is also no state return with its own deductions and credits to track.
Income-tax states that exempt Social Security. Most of the ranking falls in this group. These states tax other income but leave Social Security out. Wisconsin, for example, has an income tax but exempts benefits with no conditions. The exemption holds even if you realize more taxable income in a given year, such as a large IRA withdrawal or a capital gain. Your benefits stay exempt, while the other income is taxed at the state’s normal rates.
That second point decides most moves. A state that exempts Social Security can still tax pension income, traditional IRA withdrawals, 401(k) distributions, annuity payments and investment income. A retiree living mostly on benefits sees little difference between the two groups. A retiree with a large pension or tax-deferred savings may find that the state’s treatment of that other income outweighs the Social Security exemption.
How to Choose Between the States on the List
Every state in the ranking gives the same result on the question in the headline: no state tax on benefits. The differences that change your total bill lie elsewhere:
- Treatment of other retirement income. Find out whether the state taxes pensions, IRA and 401(k) withdrawals and investment income, and whether it offers age-based exclusions. This is usually the largest item for retirees with savings.
- Property tax. For homeowners, property tax is a fixed yearly cost that does not shrink as income falls in retirement.
- Sales and excise taxes. States without an income tax often lean more on these, and they affect retirees who spend most of their income.
- Estate and inheritance taxes. Some states tax estates or heirs, which matters for anyone planning a bequest.
- Cost of living and healthcare access. These are not taxes, but they can outweigh a tax difference.
Federal Tax Applies in Every State
Moving to a state that exempts benefits does not affect federal tax. The IRS rules are the same nationwide, so a retiree in Texas and a retiree in Vermont with identical income owe the same federal tax on their benefits.
Federal tax depends on combined income: your adjusted gross income (AGI), plus nontaxable interest (such as municipal bond interest), plus half of your Social Security benefits. That total sets how much of your benefits can be taxed:
| Filing status | Combined income | Share of benefits that can be taxed |
|---|---|---|
| Single, head of household, surviving spouse, or married filing separately and living apart all year | $25,000 or less | 0% |
| $25,001 to $34,000 | Up to 50% | |
| Over $34,000 | Up to 85% | |
| Married filing jointly | $32,000 or less | 0% |
| $32,001 to $44,000 | Up to 50% | |
| Over $44,000 | Up to 85% |
Married people who file separately and lived with their spouse at any point in the year can have up to 85% of benefits taxed, with no lower tier. In every case, 85% is the ceiling. No one pays federal tax on 100% of their benefits.
“Up to” matters in this table. Crossing a threshold does not make 50% or 85% of your benefits taxable at once. The IRS worksheet in Publication 915 brings benefits into taxable income gradually as combined income rises past each threshold.
Hypothetical example: A single filer has $20,000 of AGI from IRA withdrawals, $1,000 of tax-exempt bond interest and $24,000 of Social Security. Combined income is $20,000 + $1,000 + $12,000 = $33,000. That falls in the 50% tier, so part of the benefits becomes federally taxable. The exact amount comes from the worksheet, not from multiplying $24,000 by 50%.
Tax-exempt interest counts toward combined income, so municipal bonds that are free of federal tax can still raise the tax on your benefits. Qualified Roth IRA withdrawals are not part of AGI and do not raise combined income.
The Eight States That May Still Tax Benefits
Each of these states has its own test. Most use AGI, and several exempt benefits fully below a cutoff. The figures below are the tax year 2026 rules.
| State | How benefits are treated |
|---|---|
| Colorado | Age 65+: federally taxable benefits fully deductible. Age 55 to 64: fully deductible if AGI is $75,000 or less (single) or $95,000 or less (joint); above those levels, the deduction is the lesser of $20,000 or federally taxable benefits (per qualifying spouse for joint filers) |
| Connecticut | Fully exempt under $75,000 AGI (single, married filing separately) or under $100,000 (joint, head of household); above that, no more than 25% of benefits is subject to state tax |
| Minnesota | Fully exempt under the simplified subtraction at $86,410 or less (single, head of household) or $110,780 or less (joint); above those levels the subtraction phases out and can reach zero |
| Montana | Federally taxable benefits are included in state taxable income for all filers |
| New Mexico | Fully exempt at $100,000 or less (single), $75,000 or less (married filing separately), or $150,000 or less (joint, head of household, surviving spouse) |
| Rhode Island | Fully exempt for filers at full retirement age with income under $107,000 (single, head of household, married filing separately) or under $133,750 (joint, surviving spouse) |
| Utah | Nonrefundable tax credit for income up to $54,000 (single), $45,000 (married filing separately) or $90,000 (joint, head of household) |
| Vermont | Fully exempt at $55,000 or less for single and similar filers, partial exemption between $55,000 and $65,000; joint filers get a partial exemption, with thresholds at $70,000 and $80,000 |
Rhode Island had not formally published its 2026 limits, so confirm its thresholds with the Rhode Island Division of Taxation before relying on them. State rules also change from year to year (West Virginia’s phaseout and New Mexico’s expanded exemption are recent examples), so check the current year’s rules with the state revenue department before you move or file. A tax professional can model how your mix of income would be taxed in the states you are considering.
These rules work in different ways, and the differences change what you owe:
- Exemptions and deductions (Colorado, Connecticut, Minnesota, New Mexico, Rhode Island, Vermont) remove benefits from state taxable income, fully or partly.
- A credit (Utah) leaves benefits in taxable income and reduces the tax afterward. A nonrefundable credit can bring the tax down to zero but cannot produce a refund.
- Full inclusion (Montana) taxes whatever portion of benefits is federally taxable. A retiree whose benefits are not federally taxable has nothing to include.
- Age tests apply in Colorado (55 to 64 versus 65 and older) and Rhode Island (full retirement age).
Moving from one of these states to a non-taxing state can save money, but only if your income is above the state’s exemption level. A Connecticut couple with AGI under $100,000 already pays no state tax on benefits.
FAQs
Does North Carolina tax Social Security benefits?
No. North Carolina has a state income tax but is not one of the eight states that may tax benefits in 2026, so Social Security is exempt. Other retirement income, such as IRA withdrawals, can still be subject to its income tax.
Is federal tax withheld from Social Security in Tennessee?
Not automatically. Tennessee has no income tax on benefits, but federal tax can still be owed. You can ask for federal withholding at a set percentage with Form W-4V, or make quarterly estimated payments.
Are there states where workers don't pay Social Security tax?
No state exempts its residents from the federal Social Security payroll tax. It is a federal tax on wages and self-employment income in every state. Some state and local government employees are not covered by Social Security because their employer provides a separate pension instead, but that depends on the employer, not the state of residence.
The Bottom Line
The state rules matter most to retirees with pensions, tax-deferred savings or income above the exemption levels in the eight taxing states. A retiree living mostly on Social Security sees little difference among the 42 non-taxing states, while one with large IRA or pension income should compare how each state taxes that money. Federal tax stays the same wherever you live, so confirm the current year's state rules before moving or filing.
