Most states do not tax Social Security benefits — as of 2026, only nine states still include Social Security income in their state tax calculations, and several of those offer generous exemptions that can reduce or even eliminate what you owe. If you live in one of the 41 states (plus Washington D.C.) that fully exempts Social Security from state income tax, you can stop worrying about that particular bill. But if you live in Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, or West Virginia, it pays to understand exactly how your state treats your benefits — because the difference can add up to hundreds or even thousands of dollars a year.

Which states tax Social Security benefits in 2026?

Nine states currently include Social Security in their taxable income calculations, but the rules vary widely:

  • Colorado exempts the first $24,000 of Social Security for residents 65 and older.
  • Connecticut exempts benefits entirely if your adjusted gross income (AGI — your total income before most deductions) is below $75,000 for single filers or $100,000 for married couples filing jointly.
  • Minnesota offers a partial deduction that phases out at higher income levels.
  • Montana taxes Social Security using federal rules as a starting point, then applies its own income thresholds.
  • New Mexico fully exempts Social Security for single filers earning under $100,000 and joint filers under $150,000.
  • Rhode Island exempts benefits for those at full retirement age if income is below $101,000 (single) or $126,250 (joint).
  • Utah provides a tax credit that effectively eliminates state tax for lower-income retirees.
  • Vermont exempts benefits if AGI is below $65,000 (single) or $85,000 (joint).
  • West Virginia is in the process of phasing out its Social Security tax entirely, with full exemption expected by 2026 for most filers — check your state’s current guidance.

If you recently moved or are considering relocating in retirement, state tax treatment of Social Security is one of the most powerful (and often overlooked) financial factors to weigh.

How much of Social Security is taxable at the federal level?

Before your state even enters the picture, the federal government may tax a portion of your Social Security. The amount depends on your “combined income” — that’s your AGI, plus any non-taxable interest, plus half of your annual Social Security benefit.

  • If your combined income is below $25,000 (single) or $32,000 (married filing jointly), none of your Social Security is federally taxable.
  • Between $25,000–$34,000 (single) or $32,000–$44,000 (joint), up to 50% of your benefits may be taxable.
  • Above $34,000 (single) or $44,000 (joint), up to 85% of your benefits can be taxed.

Importantly, “up to 85% taxable” doesn’t mean you pay 85% tax — it means up to 85% of your benefit is included in your taxable income, then taxed at your normal income tax rate. For most retirees, that rate is 12% to 22%.

What strategies can reduce the state and federal tax on my Social Security?

The good news: there are several legitimate, proven strategies to lower your Social Security tax burden.

1. Manage your combined income carefully. Since your tax on Social Security is driven by your total income, keeping withdrawals from traditional IRAs and 401(k)s lower in a given year can push you into a more favorable bracket. This is where coordinating your income sources matters enormously.

2. Use Roth conversions strategically. Converting money from a traditional IRA to a Roth IRA (you pay tax on the amount converted, but future withdrawals are tax-free) in years before you claim Social Security can reduce your taxable income later. This takes planning, but it’s one of the most powerful tools available.

3. Consider when you claim Social Security. Claiming at 62 means a permanently reduced benefit. Waiting until 70 locks in the maximum — up to 32% more than your full retirement age benefit. Delaying can also change which tax bracket your income falls into in your early retirement years.

4. Charitable giving from your IRA. If you’re 70½ or older, a Qualified Charitable Distribution (QCD) lets you donate directly from your IRA to charity — up to $105,000 in 2026 — without that amount ever counting as taxable income. This can meaningfully reduce your combined income calculation.

How do RMD rules affect my Social Security taxes?

Required Minimum Distributions — RMDs — are the mandatory annual withdrawals the IRS requires you to take from traditional IRAs and most employer retirement plans once you reach a certain age. Under current rules, RMDs begin at age 73 (this was updated under the SECURE 2.0 Act, which passed in late 2022). The RMD amount increases each year as a percentage of your account balance.

Here’s where it gets important for Social Security: every dollar of your RMD adds to your combined income, which can push more of your Social Security benefits into taxable territory. For retirees with large IRA balances, RMDs can trigger a cascade — higher combined income means more Social Security gets taxed, which can also trigger Medicare IRMAA surcharges (more on that below).

Planning ahead — ideally converting some traditional IRA funds to Roth before RMDs kick in — can dampen this effect significantly.

What is Medicare IRMAA and why should Social Security earners care?

IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an extra surcharge added to your Medicare Part B (and Part D) premiums if your income exceeds certain thresholds. The standard Medicare Part B premium in 2025 was $185.00 per month. But if your income from two years prior (the IRS uses a two-year lookback) was above $106,000 (single) or $212,000 (joint), you pay more — potentially several hundred dollars more per month.

Because Social Security income, Roth conversions, and RMD withdrawals all affect your MAGI (Modified Adjusted Gross Income — essentially your total income used for federal purposes), they can all push you into an IRMAA bracket. Being even $1 over a threshold can cost you thousands in extra Medicare premiums.

The fix? Work with a financial planner or tax professional to project your income in the year before Medicare enrollment and in every year thereafter. Sometimes deliberately staying just below a threshold — even if it means taking a slightly smaller Roth conversion — saves you real money.

Frequently Asked Questions

Frequently Asked Questions

When should I claim Social Security to maximise my benefit?

Claiming at age 70 gives you the largest possible monthly benefit — up to 32% more than claiming at your full retirement age (66 or 67, depending on your birth year) and significantly more than claiming at 62. If you’re in good health and have other income to live on in your early retirement years, delaying is usually the financially superior choice. Married couples should pay special attention to the higher earner delaying, as this maximises the survivor benefit.

How much of my Social Security benefit is taxable?

Up to 85% of your Social Security benefit can be included in your federal taxable income, depending on your combined income (AGI plus non-taxable interest plus half your Social Security). If your combined income is below $25,000 (single) or $32,000 (married), none of it is taxable. Most middle-income retirees find that between 50% and 85% of their benefit is subject to federal tax, though the actual tax rate applied is their normal income tax rate — not 85%.

What are the RMD rules for 2025 and 2026?

Under the SECURE 2.0 Act, Required Minimum Distributions from traditional IRAs and most employer retirement plans begin at age 73 for anyone born in 1951 or later. The amount you must withdraw each year is calculated by dividing your account balance (as of December 31 of the prior year) by an IRS life expectancy factor. Missing an RMD triggers a steep penalty — 25% of the amount you should have withdrawn, reduced to 10% if corrected promptly.

How do I avoid Medicare IRMAA surcharges?

Medicare IRMAA surcharges are triggered when your Modified Adjusted Gross Income from two years prior exceeds $106,000 (single) or $212,000 (joint) as of 2025 thresholds. To avoid them, manage large income events like Roth conversions and IRA withdrawals carefully, staying below the threshold where possible. If your income dropped significantly due to a life event (retirement, divorce, death of a spouse), you can appeal to Social Security using Form SSA-44 to have your premium recalculated using more recent income.

What is the Medicare Part B premium for 2025?

The standard Medicare Part B premium for 2025 is $185.00 per month, up from $174.70 in 2024. This covers outpatient medical services including doctor visits, lab tests, and preventive care. Higher-income beneficiaries pay more due to IRMAA surcharges, with premiums potentially reaching $628.90 per month at the highest income tiers. Most people have Part B premiums automatically deducted from their Social Security payment.