If you're a senior on Social Security, you're probably looking forward to the upcoming cost-of-living adjustment (COLA) announcement. We don't know exactly how much it'll be yet, but we can be pretty certain that all beneficiaries will see some sort of a boost in 2026.
However, that could come with an unexpected downside: more taxes. The federal government taxes the Social Security benefits of seniors with incomes over a certain amount, and the following nine states also take a chunk of some of their residents' checks.
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The 9 states that tax Social Security benefits
The following nine states currently tax the Social Security benefits of some of their seniors:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
There's good news for West Virginians, though. The state is in the process of phasing out its benefit taxes. In 2025, all single taxpayers with adjusted gross incomes (AGIs) of $50,000 or less and married taxpayers with AGIs of $100,000 or less are exempt from taxation. Those with AGIs over this amount will only owe taxes on 35% of their Social Security benefits this year. Next year, all Social Security benefits will be exempt from state taxation.
Other states have similar rules exempting those with low AGIs from paying state taxes on their benefits. But the taxation thresholds vary depending on where you live. Check with your state department of taxation or an accountant that operates in your state to learn whether you're at risk of owing any state benefit taxes.
Everyone should watch out for federal Social Security benefit taxes
Even if you're in the clear for state Social Security benefit taxes, there's a good chance you could owe federal income taxes on your benefits. It depends on your marital status and your provisional income -- your AGI, plus any nontaxable interest you have from municipal bonds, and half your annual Social Security benefit -- as shown in the table below.
|
Marital Status |
0% of Benefits Taxable If Provisional Income Is Below: |
Up to 50% of Benefits Taxable If Provisional Income Is Between: |
Up to 85% of Benefits Taxable If Provisional Income Exceeds: |
|---|---|---|---|
|
Single |
$25,000 |
$25,000 and $34,000 |
$34,000 |
|
Married |
$32,000 |
$32,000 and $44,000 |
$44,000 |
Data source: Social Security Administration.
These thresholds aren't high, and they don't increase annually. So as your Social Security benefits increase or your AGI goes up due to rising costs, you're more likely to owe these taxes.
The good news is, you won't lose up to 85% of your benefits even in the worst-case scenario. But you could pay your ordinary income tax -- up to 37%, though most people pay far less than this -- on up to 85% of your annual benefits.
What to do if you think you'll owe Social Security benefit taxes
Getting around federal Social Security benefit taxes might be doable if you can reduce your expenses to keep your provisional income below the thresholds above. But for many people, that's just not an option.
In that case, the best thing you can do is prepare for the taxes you'll owe. You can work with an accountant to estimate how much this will be and then carve out a portion of your budget for these taxes if you expect a bill at the end of the year.
You can also request that the Social Security Administration withhold a portion of your checks for taxes. You can choose to have 7%, 10%, 12%, or 22% of your checks kept back for taxes. This reduces your risk of owing any benefit taxes at the end of the year. If the government ends up withholding too much, you'll get back the money you're owed with your tax refund.
