The 13 States Where Retirees Win Big on Social Security Taxes (and 8 Where They Lose)
Written by
Chris Adam
Edited by
Zuri Anderson
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When it comes to retirement finances, you may be among the many taxpayers wondering why most states don’t tax Social Security benefits.
“Good question: Why not impose state income tax on something that for many taxpayers, the federal government taxes?” asked Annette Nellen, certified public accountant (CPA) and professor of accounting and taxation at San Jose State University. “Likely to help and attract retirees.”
Here’s a look at some states where retirees may win big on Social Security taxes — and places they may lose.
Where Retirees Win Big
“Retirees in Florida, Texas, Nevada, Wyoming, Alaska, South Dakota, Tennessee, New Hampshire and Washington pay zero state income tax on Social Security,” said Chad Cummings, an attorney and CPA at Cummings & Cummings Law. “These states win by default. Kansas, Missouri, Nebraska and West Virginia all eliminated their Social Security taxes by 2026, joining that group.”
According to Taylor Kovar, certified financial planner (CFP) and CEO of 11 Financial, another state that surprises people is Pennsylvania.
“Even though the state has an income tax, Social Security benefits and most retirement income are exempt,” Kovar added. “Retirees who move there from other Northeastern states sometimes notice the difference once they start looking at their tax situation.”
Where Retirees Feel More Pressure
Cummings noted that eight states tax Social Security in 2026: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont.
“Montana offers retirees 65 and over a $5,500 subtraction against a 5.65% rate, which leaves exposure for anyone with income above that threshold,” Cummings added. “Minnesota phases out its subtraction above about $108,00 for joint filers, penalizing retirees who hold pension income or rental properties.”
According to Andrew Lokenauth, founder of the blog Fluent in Finance, “The takeaway is real: Where you retire isn’t just a lifestyle choice. It’s a financial decision worth thousands of dollars a year.”
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