State-by-State Social Security Taxes 2026: New senior deductions provide significant relief through 2028, even though federal regulations still tax up to 85% of benefits. Only seven states are taking a cut as West Virginia formally ends its state-level tax. Millions of people’s monthly take-home pay will change as a result of these adjustments.
The tax landscape for retirees in the United States is changing in subtle but significant ways as 2026 approaches. The guidelines for taxation Social Security benefits are still in place at the federal level. Depending on their overall income, retirees may still have up to 85% of their benefits considered taxable income. However, the amount that retirees actually keep each month is changing due to significant state-level reforms and increased federal assistance for seniors.
State-by-State Social Security Taxes 2026
Nowadays, several jurisdictions are rushing to lower the cost of retirement. The objective is straightforward: lowering taxes on fixed incomes will draw in and keep senior citizens. The majority of states will not impose any taxes on Social Security payouts in 2026. Income-based exemptions lessen the harm for many households, however a tiny percentage still do. The largest change comes from West Virginia, which will join the increasing number of states that are retirement-friendly by completely eliminating its Social Security levy in 2026.
Meanwhile, relief is being extended through 2028 through a temporary government deduction for seniors. This reduces millions of retirees’ total taxable income, but it has no effect on how Social Security is taxed under federal law. Together, these adjustments can significantly raise take-home pay for households who receive modest retirement withdrawals in addition to Social Security. However, income thresholds are still important, and even little adjustments to withdrawals may result in unanticipated tax increases. Retirement planning now requires an understanding of the regulations.
Social Security and State Taxes Explained
Social Security is still subject to “combined income” taxation by the federal government through the Internal Revenue Service. This amount comprises 50% of Social Security benefits, nontaxable interest, and adjusted gross income. In 2026, the formula itself remains unchanged.
Benefits are typically tax-free for single filers whose total income is less than $25,000. Up to 50% of benefits could be taxable between $25,000 and $34,000. Up to 85% of amounts over $34,000 may be subject to taxes. These thresholds increase to $32,000 and $44,000 for married couples filing jointly. As wages rise, more pensioners are subject to taxes because these restrictions have been frozen for decades.
The One Big Beautiful Bill Act is a significant development for 2026. For the 2025–2028 tax years, the law creates a temporary senior deduction. An extra $6,000 deduction is available to taxpayers who are 65 years of age or older. When both spouses are eligible, married couples can deduct $12,000.
The standard deduction and current age-based add-ons are stacked on top of this deduction. It can greatly reduce ultimate taxable income, but it does not diminish “combined income” for Social Security computations. This entails maintaining a lower tax bracket or completely eliminating federal tax obligations for a large number of retirees.
States will stop taxing Social Security by 2026
The majority of states will stop taxing Social Security by 2026. West Virginia, which completely exempts benefits after gradually eliminating the tax over a number of years, is the most notable difference. Only a few states remain that tax benefits to some extent.
Retirees still need to keep a tight eye on their income despite the additional deductions. A minor increase in withdrawals from an IRA or 401(k) might raise total income above important benchmarks. The effective tax rate may rise significantly as a result of additional Social Security payouts being taxable. This phenomenon is frequently referred to as the “tax torpedo.”
What New Senior Tax Deductions Take Effect Under Trump’s 2026 Tax Law?
President Donald Trump’s “One Big Beautiful Bill Act” will extend federal tax advantages to older Americans beginning in 2026. In addition to the standard deduction, taxpayers 65 years of age and over are eligible for an additional deduction of up to $6,000.
This permits single filers over 65 to deduct up to $23,750 for the 2025 tax year. When both spouses are over 65, married couples filing jointly are eligible to deduct up to $46,700. Through 2028, these increased deductions are expected to stay in effect.
In addition to potentially lowering or eliminating federal taxes on Social Security income for many middle-class retirees, the greater write-offs are meant to assist offset growing healthcare and living expenses.
Tax Rates And Formulas Vary By State
States impose their own taxes on Social Security benefits. Eight states levied taxes on benefits in 2025. When West Virginia does away with its Social Security tax in 2026, that figure falls to seven.
Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont are the states that will keep charging Social Security benefits. Many retirees with lower and moderate incomes pay little to no state tax on their benefits because the majority of these jurisdictions offer income-based exemptions.
States have different tax rates and formulas. While some phase off taxes as income decreases, others provide partial exclusions. A separate strategy is used in Colorado, where eligible seniors can deduct Social Security income that is subject to federal taxes from their state return.
Why Does Your State Still Matter When It Comes To Retirement Social Security Taxes?
Social Security is not taxed in the majority of states, but those that are have a substantial impact on retirement income, particularly for higher wages. Income level, filing status, and local deduction eligibility all affect state tax exposure.
The general trend is in favor of retirees as more states are shifting away from taxing benefits and federal deductions are growing. However, it is still essential to comprehend state-specific regulations. Where Americans live in 2026 may have an impact on how much of their monthly Social Security payment they ultimately retain.