A major relief is coming for retirees as one more U.S. state has announced it will end state taxation of Social Security benefits starting in 2026. The change positions this state alongside a growing list of states that fully exempt Social Security income, providing retirees with more financial stability during a time of rising living costs.
For seniors living on fixed incomes, Social Security is a crucial source of money for daily expenses, healthcare, housing, and food. Eliminating state taxes on Social Security benefits ensures that retirees keep more of the income they earned after decades of work.
Why the State Is Ending Social Security Taxes
Lawmakers cite several reasons for removing Social Security taxation, including:
• Rising inflation and higher retirement expenses
• The need to make the state more retirement-friendly
• Pressure to match neighboring states that already provide the exemption
• Reducing the financial burden on seniors with limited savings
The updated policy aims to attract retirees, support long-term residents, and provide financial security to older adults.
How Many States Tax Social Security?
Right now, only a small number of states still tax Social Security benefits, and that list continues to shrink as more states introduce exemptions or phaseouts.
Starting in 2026, the newly added state will join those that already do not tax Social Security at all, meaning retirees there will owe zero state income tax on their monthly benefits.
What This Change Means for Retirees
Ending state taxation of Social Security has immediate financial benefits for retirees. It means:
• Higher take-home Social Security income
• Lower overall tax burden
• Less pressure on retirement savings
• More flexibility with rising healthcare and housing costs
For many seniors living on fixed incomes, even a small change can make a significant difference.
Social Security Taxation Overview — 2026 Update
| Category | Details (Effective 2026) |
|---|---|
| State Tax on Social Security | Eliminated for eligible residents |
| Impacted Group | Retirees receiving SSA, SSDI, or survivor benefits |
| Federal Taxes | Remain unchanged (up to 50% or 85% depending on income) |
| Income Thresholds | State tax removed regardless of income level |
| Overall Financial Benefit | Higher net monthly Social Security income |
Federal taxation rules still apply, but residents will no longer pay any state tax on benefits beginning January 1, 2026.
When Does the Tax Exemption Begin?
The new tax-free status for Social Security benefits will begin on:
January 1, 2026
All Social Security payments issued on or after this date will be exempt from state income taxes.
Who Will Benefit the Most?
The Social Security tax repeal will most benefit:
• Low-to-middle income retirees
• Seniors relying mostly on SSA checks
• Retirees with limited savings
• Disabled residents receiving SSDI
• Survivors receiving Social Security survivor benefits
Households living solely on Social Security will see the largest improvement in monthly disposable income.
How Retirees Can Prepare Before 2026
Although no application is needed, retirees should:
• Review their state tax withholding preferences
• Update their retirement budget to reflect higher income
• Consult a tax advisor if they previously filed with taxable benefits
• Check federal tax obligations (which remain unchanged)
No additional paperwork is expected at the state level.
Frequently Asked Questions
Q1: Will retirees still pay federal taxes on Social Security?
Yes. Federal taxation rules remain the same based on income.
Q2: Do seniors need to apply for the exemption?
No. The tax repeal will be automatic for all eligible retirees in the state.
Q3: Will other states follow this policy?
Possibly. Several states are currently reviewing similar legislation.
Disclaimer: This article is based on current state announcements, legislative updates, and publicly available policy outlines. Final rules, implementation dates, and income guidelines may vary depending on state-level adjustments. Retirees should refer to their state Department of Revenue for the most accurate and updated information.
