Looking ahead to the 2026 fiscal year, Social Security beneficiaries in the United States face a changing landscape depending on the state they live in. While most states do not tax these benefits, there are still eight specific jurisdictions — Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont— that continue to have regulations that reduce retirees’ net income. According to data from NerdWallet, the amount depends on variable criteria such as Adjusted Gross Income (AGI), marital status, and the taxpayer’s age. Mitigation strategies suggested by financial experts include delaying payments until age 70 and taking advantage of specific deductions, such as those related to pets.
SSA benefit taxes
This year, 2026, residents of certain states will see their Social Security checks subject to taxation, as it is considered taxable income. Since this is not a situation that occurs in all states, it creates a purchasing power gap between retirees from different regions. While many states no longer tax Social Security checks, let’s look at the exceptions.
- Colorado. It has an age-based model. In this state, taxpayers between the ages of 54 and 55 enjoy an exemption on their first $20,000 of retirement income. However, upon reaching 65 years old, the policy changes and the benefits become completely tax-free, regardless of the amount.
- Connecticut. In this case, taxes only apply if the Adjusted Gross Income (AGI) exceeds $75,000 for individuals, or $100,000 for joint filings. Additionally, it is possible to access an exemption of up to 25% of the total benefits received.
- Minnesota. In this state, the thresholds are $84,490 for singles, and $108,320 for married couples. Those who choose to file as married filing separately will have a limit of $54,160.
- Montana. In this case, benefits over $25,000 may be taxed up to 50%, while above $34,000 the rate can rise to 85%.
- New Mexico. In this instance, income limits are relatively high, and taxes only apply when individual incomes exceed $100,000, and $150,000 for couples.
- Rhode Island. In this case, an early retirement penalty policy applies, meaning benefits are always taxed if claimed before full age (67 years), or if the AGI exceeds $107,000 (single) or $133,750 (joint).
- Vermont. The limits set are $50,000 for individuals and $65,000 for couples.
- Utah. It is one of the strictest because the limits are low: $54,000 for singles and $90,000 for married couples.
Optimization and savings
In this scenario, where each state has its own way of proceeding, financial specialists recommend:
- Trying to reduce total income to stay below the exemption thresholds.
- Considering paying taxes in installments throughout the year, thus avoiding a single payment.
- Delaying retirement benefits as long as possible.
Frequently asked questions
Which states will tax Social Security benefits in 2026?
The eight states that maintain these regulations are Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont. The implementation of these taxes creates a difference in retirees’ purchasing power depending on the region where they live.
What factors determine the amount of taxes to pay?
The tax burden varies according to specific criteria such as Adjusted Gross Income (AGI), the taxpayer’s marital status, and age. For example, in Colorado, those over 65 are exempt, while in states like Connecticut or Vermont, the tax is applied only after certain income thresholds are exceeded.
What do experts recommend to reduce the impact of these taxes?
Suggested strategies include lowering total income to stay under exemption limits, paying taxes in installments throughout the year, delaying retirement withdrawals as much as possible (up to age 70), and taking advantage of specific deductions, such as those related to pets.
