2026 Social Security Tax Changes: 43 States Now Tax-Free for Retirees
- Author: Elizabeth Miller
- Posted: 2026-01-07
Huge win for seniors – 43 states completely exempt Social Security benefits from state taxes starting 2026!
Read: Social Security Payments for January 2026 — Full Schedule Here
West Virginia dropped its SS tax completely on January 1 – now only 7 states still tax retirement benefits.
7 States That STILL Tax Social Security (2026)
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Connecticut
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Minnesota
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Montana
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New Mexico
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Rhode Island
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Utah
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Vermont
Tax-FREE (43 states + DC): Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming + 34 others.
New Federal OBBBA Tax Break for Seniors (2026-2028)
"One Big Beautiful Bill Act" adds $6,000 extra deduction ($12,000 couples) for 65+:
Your Total 2026 Deductions:
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Single (65+): $23,750 ($15,750 standard + $6K OBBBA + $2K age)
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Married (both 65+): $46,700 ($30K standard + $12K OBBBA + $4.7K age)
Federal Social Security Tax Rules (Same as Always)
Combined Income Formula: AGI + nontaxable interest + ½ SS benefits
Tax Thresholds:
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Single: 50% taxable ($25K-$34K) | 85% taxable ($34K+)
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Married Joint: 50% taxable ($32K-$44K) | 85% taxable ($44K+)
Tax Rates in the 7 States
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Connecticut: Up to 6.99% (phasing out)
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Minnesota: 5.35-9.85% (income brackets)
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Montana: 1-6.75%
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New Mexico: 1.7-5.9%
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Rhode Island: 3.75-5.99%
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Utah: Flat 4.55%
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Vermont: 3.35-8.75%
Smart Move: Relocate to Florida/Texas/Nevada = zero state SS tax + no state income tax!
Verify your state: taxfoundation.org/2026-state-income-tax-rates
2026 Takeaway: Tax-free states + OBBBA deductions = biggest Social Security tax savings ever for retirees. Check your state and maximize your benefits!
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