If you receive a monthly Social Security check to cover rent, food, and your medications, there’s something you should review before year’s end: the state you live in can affect how much money you keep. In 2026, eight states still allow state taxes on retirement benefits, though the rules vary depending on your income, age, and tax situation.
The good news is that not all retirees living in those places end up paying. Some may be completely exempt.
What states tax Social Security benefits in 2026?
According to the analysis published by Yahoo Finance and the Connecticut Legislative Research Office report, the eight states that still tax at least a portion of these benefits are:
In the rest of the country, the benefits are exempt from state taxes or the state does not have a broad income tax. That includes places like Florida, Texas, Nevada, and Wyoming, destinations that tend to attract retirees looking to cut costs.
But there is an important caveat: that a state does not tax Social Security does not mean it won’t tax your pensions, 401(k) withdrawals, or investment income.
In which states can you be exempt from paying taxes?
The rules of the eight states are not all the same. The Connecticut General Assembly report explains that seven offer full or partial exemptions, generally tied to income or age.
Here are a few examples:
Montana is the exception: it does not offer a specific exemption for these benefits, so the federally taxable portion can also be subject to state tax.
Do you also have to pay federal taxes on your Social Security?
Yes, and this is where many retirees get confused. Even if your state doesn’t tax the check, the federal government can tax a portion of your benefits.
The Internal Revenue Service (IRS) uses a formula called combined income. To calculate it, you add half of your annual Social Security benefits, your other income, and certain tax-exempt interest.
According to federal rules:
That does not mean you’ll be charged an 85% rate on your check. It means that portion may be included in your taxable income.
You should also know that Supplemental Security Income (SSI) payments are not subject to federal income tax, according to the IRS.
Will Social Security taxes change in 2027?
Yes, there is a planned change in Rhode Island. Starting in fiscal year 2027, the state will eliminate the requirement of having reached full retirement age to qualify for the exemption, as long as you meet the established income limits.
The measure could benefit thousands of residents who receive Social Security before reaching that age.
If you’re considering moving to pay fewer taxes, don’t base the decision solely on your monthly check. Also review housing taxes, pensions, retirement withdrawals, and the cost of living. Saving on Social Security taxes can help, but what really matters is how much money you have left after covering all your expenses.
