A retired teacher in Morgantown, West Virginia, collecting $2,200 a month in Social Security and pulling modest withdrawals from a 401(k) will owe her state government nothing on those benefits when she files her 2026 return. Had she retired across the border in Connecticut on the same income, she could still face a state tax bill of several hundred dollars. That gap is not hypothetical. As of June 2026, three states have freshly eliminated or sharply reduced taxes on retirement benefits, while at least five others continue to take a cut. The rules have shifted fast enough that even research from early 2025 may already be outdated.
For retirees weighing where to live and for those already locked into a state wondering what they owe, here is where things stand right now.
Three states that just stopped taxing retirement benefits
West Virginia‘s change is the most dramatic. Under House Bill 4880, passed in the state’s 2024 legislative session, the state phased out its tax on Social Security over three years, applying a 35 percent income modification for higher earners in tax year 2024, raising that to 65 percent in 2025. For tax year 2026, the West Virginia State Tax Division confirms a full 100 percent exemption. No state income tax applies to Social Security benefits regardless of how much a retiree earns. A retiree collecting $2,200 a month in Social Security, or $26,400 a year, keeps every dollar of that from the state. For people who stayed in the Mountain State because of family ties or low housing costs but resented paying state tax on benefits that neighboring Virginia and Pennsylvania never touched, that irritant is gone.
Michigan took a more complicated legislative route. Public Act 4 of 2023, known as the Lowering MI Costs Plan, created a four-year phase-out of Michigan’s birth-year-based deduction caps on retirement income, completing in tax year 2026. The Michigan Department of Treasury spelled out the mechanics in Revenue Administrative Bulletin 2026-1. Beginning with the 2026 tax year, all Michigan retirees, regardless of birth year, can elect to deduct retirement income up to an inflation-adjusted cap of $67,610 for single filers and $135,220 for joint filers. Public Act 24 of 2025 added a narrower benefit for taxpayers born after 1952 who are aged 67 or older, allowing them to claim both the standard deduction and the Social Security deduction for tax years 2026 through 2028.
For most qualifying retirees, the result is larger deductions on 2026 state returns, especially for households juggling a mix of public pensions, private pensions, and Social Security. Michigan’s system still has moving parts, though. The dollar cap applies to combined public and private retirement income, and the interaction between the standard deduction, the Social Security deduction, and the retirement income deduction depends on age and birth year. Retirees should run their specific income mix against the 2026 rules before assuming everything is tax-free.
Missouri got there first. According to the Missouri Senate’s bill summary, Senate Bill 190 removed the adjusted gross income cap on the state’s Social Security deduction starting January 1, 2024, taking full effect immediately rather than phasing in over years like Michigan’s and West Virginia’s changes.The Missouri Department of Revenue confirmed that the income limitation was eliminated for tax years beginning on or after that date. A Missouri retiree collecting $2,200 a month in Social Security who previously earned too much to claim the full deduction now receives it automatically, effectively wiping out state income tax on those benefits and significantly reducing the burden on many public pensions. By 2026, the change is fully embedded in Missouri’s tax code, and retirees filing this spring are already seeing the benefit for a second consecutive year.
Five states still collecting on retirement income
Not every state is moving in the same direction. At least five states will continue taxing some or all retirement income in 2026, and the mechanisms vary enough that a blanket statement like “this state taxes Social Security” can be misleading without the details.
Colorado folds federally taxable Social Security into state income but allows specific subtractions claimed on Form DR 104AD. The Colorado Department of Revenue sets subtraction amounts based on age. Taxpayers 65 and older qualify for a larger exclusion (historically around $24,000 for Social Security and qualifying pension income combined, though the figure is adjusted periodically). A retiree collecting $2,200 a month in Social Security plus a moderate 401(k) withdrawal could exceed that cap and owe state tax on the portion above it. Retirees with large required minimum distributions from traditional IRAs and 401(k)s can blow past those caps and owe meaningful state tax on benefits that would be untouched in West Virginia or Missouri.
Utah uses a credit-based system rather than an outright exemption. The Utah State Tax Commission offers a Social Security Benefits Credit that fully offsets state tax on benefits for single filers with modified adjusted gross income up to $54,000 and joint filers up to $90,000. The credit phases out by $1 for every $4 of income above those thresholds, eventually disappearing entirely. Above the phaseout, Social Security and other retirement income are fully exposed to Utah’s flat 4.5 percent income tax rate. A couple with combined retirement income well above $90,000 could see most or all of that credit disappear, and a retiree collecting $2,200 a month in Social Security with additional pension or IRA income pushing total earnings past the phaseout could owe several hundred dollars in state tax annually.
Connecticut exempts Social Security for individuals with federal adjusted gross income below $75,000 (or $100,000 for joint filers), according to the Connecticut Department of Revenue Services. Retirees above those thresholds still owe state tax on a portion of their benefits, though under a partial deduction, no more than 25 percent of total Social Security benefits is subject to Connecticut state income tax. The state has been gradually raising the income limits in recent sessions, yet many middle- and upper-middle-income retirees remain on the hook, particularly those with pension income or significant IRA distributions pushing their AGI past the cutoff. A single retiree collecting $2,200 a month in Social Security whose total AGI exceeds $75,000 because of other retirement income would owe Connecticut tax on a portion of those benefits.
Minnesota offers a Social Security subtraction that depends on income. According to the Minnesota Department of Revenue, for tax year 2026, the simplified subtraction allows full exemption of federally taxable Social Security benefits for married couples filing jointly with adjusted gross income below $110,780, single filers below $86,410, and married filing separately below $55,390. Above those thresholds, the subtraction phases out by 10 percent for each $4,000 of AGI in excess (or each $2,000 for married filing separately), eventually disappearing entirely. What makes Minnesota’s exposure sting more than most is the state’s overall income tax structure: the top bracket reaches 9.85 percent, according to the Minnesota Department of Revenue, making the remaining taxable portion of Social Security considerably more expensive than it would be in a lower-rate state.
Montana allows a partial exemption for Social Security income, but the exemption is calculated by first determining the federally taxable portion of benefits under IRC Section 86, then applying Montana’s own income-based reduction. The Montana Department of Revenue uses this two-step approach so that retirees with income above the state’s cutoffs continue to pay state tax on a share of their benefits in 2026. Montana also overhauled its tax structure beginning in 2024, replacing a seven-bracket system with a streamlined two-bracket structure at 4.7 percent and 5.9 percent, and starting with the 2025 tax year, retirees age 65 and older can deduct up to $5,500 of qualified retirement income, a narrower benefit than the partial pension and annuity deduction the state previously offered. Pension income from private-sector plans remains broadly taxable, which can catch retirees off guard if they assumed Social Security relief meant all their retirement income was protected.
For retirees comparing states, the headline question of whether a state taxes Social Security often hides a more complicated reality involving income thresholds, birth-year rules, and interactions with other deductions. A state that technically taxes benefits may still be affordable for a modest-income couple, while a state that advertises no tax on Social Security could still collect heavily on large IRA withdrawals or private pensions.
It is also worth noting what this list does not include: the nine states with no income tax at all, including Florida, Texas, Nevada, and Wyoming. Those states do not appear here because they never taxed retirement income in the first place, but they remain the simplest option for retirees who want to avoid state-level taxation entirely.
What this means for retirees weighing a move
The 2026 changes in West Virginia and Michigan, combined with Missouri’s earlier shift, show how quickly the retirement tax map can change. A retiree who left West Virginia five years ago specifically to avoid Social Security taxes might now find the state more competitive, particularly if housing and health care costs remain lower than in neighboring metro areas. Long-time Michigan residents who delayed retirement partly because of state tax concerns may discover that the expanded subtractions make it more affordable to stop working without relocating.
Meanwhile, retirees in Colorado, Utah, Connecticut, Minnesota, and Montana need to factor ongoing state taxes into their annual budgets. For some, that means setting aside a portion of each pension check or IRA distribution for quarterly estimated payments. For others, especially those on fixed incomes with little flexibility, the continuing tax bite could influence decisions about downsizing, part-time work, or crossing a state line.
Because each state’s rules interact differently with federal law and individual income patterns, personalized projections matter far more than generalizations. Running the numbers through your state’s own tax worksheets, or working with a preparer who knows the specifics of where you live and where you are considering moving, is the difference between a smart relocation and an expensive surprise.
Why three statehouses moved and five others held back
Legislatures in aging states face real pressure to keep retirees from leaving, and eliminating Social Security taxes is one of the most politically popular tools available. But the pace and structure of those changes vary wildly from statehouse to statehouse. The three states took different routes: West Virginia phased its exemption in over three years, Missouri flipped a switch with a single bill, and Michigan built a layered system that requires a bulletin to fully explain. The five states still taxing retirement income have not stood still either; most have expanded exemptions or raised thresholds in recent sessions, just not enough to reach full elimination.
Knowing exactly where your Social Security and pension income will be taxed and where it will be sheltered remains one of the most consequential financial decisions a retiree can make. The states that rewrote their rules in the last two years prove the landscape does not sit still, and neither should your planning.
