Retirees in These 9 States Risk Losing Some of Their Social Security Benefits
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By Kailey Hagen, CFP – Jan 10, 2026 at 9:00AM ESTKey PointsEight states still tax the Social Security benefits of some of their seniors.Some West Virginians could owe benefit taxes on their 2025 returns, but they won't in 2026 and beyond.Federal benefit taxes are much more common and could cost retirees thousands of dollars per year.CEO says this is worth 18 Nvidias. Will this make the world's first trillionaire? ›State benefit taxes are largely fading into the past, but they remain alive and well in these places.While the average Social Security benefit now sits at an all-time high of $2,071 per month, living off your benefits alone is still challenging. Even if you have a relatively modest lifestyle, you could still find yourself pinching pennies to make it through the month. Seniors in some states also forfeit a chunk of their benefits to state taxes. Fortunately, these taxes are falling out of favor. Many of those living in the eight states that still have them won't lose any of their Social Security checks to their state governments. But there could still be a surprise waiting at tax time. Image source: Getty Images. The eight states that tax Social Security benefits in 2026 While many states used to have Social Security benefit taxes, they've become increasingly unpopular. Several states have responded by phasing them out. Only the following eight still have benefit taxes on the books in 2026: Colorado Connecticut Minnesota Montana New Mexico Rhode Island Utah Vermont West Virginia was also on this list up until last year. It began slowly phasing out its benefit tax in 2022. Those with adjusted gross incomes (AGIs) of $50,000 or less for single filers and $100,000 or less for married filers haven't owed state taxes on their Social Security benefits since then. Those with higher AGIs may owe state taxes on up to 35% of their Social Security benefits when filing their 2025 return. Beginning in 2026, no one in the state will owe any benefit taxes.Advertisement If you live in one of the other states listed, it's possible you may not owe benefit taxes either. Many states have exemptions for low-to-middle-income seniors. Check with an accountant or your state's department of taxation to learn its rules.
Federal Social Security benefit taxes remain in force Seniors in all states could owe federal Social Security benefit taxes on up to 85% of their checks. How much you'll owe depends on your provisional income. This is your AGI, plus any nontaxable interest, which you might have if you own municipal bonds, and half your annual Social Security benefit. For example, if your AGI is $40,000 and you get $20,000 in Social Security benefits, your provisional income would be $50,000. The table breaks down what percentage of your Social Security benefits you'll owe ordinary income taxes on, based on your provisional income and marital status: Marital Status 0% of Benefits Taxable If Provisional Income Is Under: Up to 50% of Benefits Taxable If Provisional Income Is Between: Up to 85% of Benefits Taxable If Provisional Income Is Over: Single $25,000 $25,000 and $34,000 $34,000 Married $32,000 $32,000 and $44,000 $44,000 Data ource: Social Security Administration. These numbers aren't indexed for inflation, meaning they don't change annually. As living costs rise, it's becoming increasingly difficult for seniors to avoid the taxable range. This could cost them thousands of dollars each year. What to do about federal Social Security benefit taxes Avoiding benefits might be possible, but it's not easy to do. You'll have to keep your AGI to a minimum, which means limiting how much money you withdraw from tax-deferred retirement accounts like traditional 401(k)s and IRAs. These distributions count toward your AGI. Roth distributions don't, so you may be able to stay below the taxation threshold by withdrawing more money from your Roth accounts if you have them. When that's not possible, you'll have to prepare for Social Security benefit taxes. You can do this by saving for the taxes on your own, or by requesting the Social Security Administration withhold money for taxes from your checks. In either case, you may want to consult with an accountant who can give you an idea of how much you'll owe in benefit taxes. They may also be able to advise you on other strategies you could take to reduce your provisional income.Read NextJan 10, 2026 •By Dana George1 Right You Sign Away When You Open a New Bank AccountJan 10, 2026 •By Marc GubertiIs It Really a Tax Haven? What to Know Before Moving to a No-Income-Tax State.Jan 10, 2026 •By Keith SpeightsWhich 13 States Don't Tax Retirement Income?Jan 10, 2026 •By Adam LevyThis Common Social Security Advice Might Not Apply to You. Here's Why You Shouldn't Always Wait Until Age 70 to Claim Benefits.Jan 10, 2026 •By Maurie BackmanBehind on Retirement Savings? Here's a Super-Easy Way to Catch Up in 2026.Jan 9, 2026 •By Stefon WaltersHow Compound Interest Can Help You Retire a Millionaire -- Even on a Modest IncomeAbout the AuthorKailey Hagen, CFP, is a contributing Motley Fool retirement analyst covering Social Security, Medicare, and retirement planning.
Before The Motley Fool, Kailey was a research analyst for Reviews.com focusing on credit and banking products. She is a Certified Financial Planner® and holds a bachelor’s degree in English from the University of Wisconsin-Madison.TMFKaileyAdvertisement