Social Security Tax by State: Which Retirement Cities Let You Keep the Most in 2026

Here's something that catches a lot of retirees off guard: your state might tax your Social Security benefits.

Most people know the federal government can tax up to 85% of Social Security income depending on combined income. What they often miss is that a handful of states pile on top with their own tax. Depending on your benefit amount, that can easily mean a difference of $1,000 to $4,000 or more per year—just from choosing the wrong state.

This guide breaks down how Social Security taxation works at the state level, which retirement cities sit in tax-friendly states, and how to work this into your location decision.

If you want to run your own numbers first, start with the RetireCityIQ Quiz. You can also browse cities at Retirement Cities or run side-by-side comparisons at Compare Cities.

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How Federal Social Security Tax Works First

Before getting into state-level rules, the federal baseline matters.

The IRS uses "combined income" to determine how much of your Social Security gets taxed. Combined income is your adjusted gross income, plus any nontaxable interest, plus half your Social Security benefit.

• Below $25,000 (single) or $32,000 (joint): No federal tax on benefits
• $25,000–$34,000 (single) or $32,000–$44,000 (joint): Up to 50% of benefits taxed
• Above $34,000 (single) or $44,000 (joint): Up to 85% of benefits taxed

Those thresholds haven't been adjusted for inflation since they were set, so most retirees with any meaningful additional income end up in the 50% or 85% bucket federally. State taxes then apply on top of that.

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Which States Still Tax Social Security Benefits?

As of 2026, roughly 10 states tax Social Security benefits in some form. The number shifts occasionally as state legislatures update their laws, so always verify current rules for your target state.

States that still tax Social Security income—fully or partially—include Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Missouri and Kansas recently eliminated their Social Security tax, which meaningfully changed the map for Midwest retirees.

The remaining 40-plus states—including Florida, Texas, Nevada, Tennessee, South Dakota, and Wyoming—don't touch Social Security benefits at the state level at all.

For a couple receiving $40,000 per year in combined Social Security in a state with a 5% flat income tax, that's up to $2,000 in extra state taxes annually. Over 10 years, that's a real number.

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Five Retirement Cities in Zero-SS-Tax States Worth a Look

Sarasota, Florida

Florida has no state income tax. That means no tax on Social Security, pensions, IRA withdrawals, or investment income. Sarasota consistently ranks well for retirees because of its Gulf Coast access, solid medical infrastructure, and cultural programming. Housing isn't cheap, but your income goes further when the state isn't taking a cut.

See retiring in Sarasota for housing and healthcare details, and compare it to other Florida cities at Compare Cities.

San Antonio, Texas

Texas also has no state income tax. San Antonio is one of the more affordable large metros in the country, with a cost of living index well below the national average for a city its size. Healthcare infrastructure is solid. The summer heat is genuine, but for retirees who can manage that, the tax environment is hard to beat.

Explore retiring in San Antonio to see how the numbers stack up.

Henderson, Nevada

Nevada has no state income tax, which makes the Las Vegas metro worth a second look beyond its reputation. Henderson is quieter and more retiree-friendly than the Strip area—newer housing stock, good medical facilities, and without the constant tourist energy. Desert summers are intense, but many retirees find the dry heat easier than the Southeast's humidity.

Chattanooga, Tennessee

Tennessee eliminated its Hall Tax on investment income in 2021, and since the state never taxed wages or Social Security directly, it has a clean income tax slate. Chattanooga offers outdoor access, a lower cost of living than most mid-size cities, and relatively affordable healthcare. It's a city that often gets underestimated on retirement lists.

Rapid City, South Dakota

South Dakota has no state income tax and is quietly gaining traction with retirees who don't need a major metro. Rapid City has decent regional healthcare, housing costs well below national averages, and access to Black Hills recreation. If your priorities lean toward affordability and natural scenery over big-city amenities, it's worth researching.

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States That Tax SS: Don't Cross Them Off Just Yet

A state that taxes Social Security doesn't automatically belong at the bottom of your list. Several offer meaningful exemptions that effectively eliminate the tax for most retirees.

Connecticut exempts Social Security entirely for individuals earning under $75,000 or couples under $100,000. That covers a significant portion of retirees.

Minnesota offers partial exemptions that phase out at higher incomes. The rules are layered enough that a state tax professional is worth consulting if you're seriously considering Minneapolis-Saint Paul.

Colorado allows a $24,000 deduction on retirement income for those 65 and older, which may wipe out the SS tax liability entirely depending on your income mix.

The point is: "the state taxes Social Security" is a starting point for research, not a conclusion. The interaction with your income level, filing status, and other deductions determines your actual bill.

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Social Security Tax Is One Piece of the Puzzle

Choosing a retirement city based on Social Security tax alone misses the bigger picture. The full tax picture includes:

• State income tax on pensions, 401(k) and IRA withdrawals, and investment income
• Property tax on your home, and whether your state offers senior exemptions
• Sales tax, which affects everyday spending
• Estate and inheritance tax, relevant if legacy planning matters to you

A state with no Social Security tax could still have high property taxes or a broad income tax that hits your IRA withdrawals hard. Looking at the complete picture before you move is the only way to know where you actually stand.

The senior property tax breaks guide on this site covers the property tax side in detail if that's your next research step.

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A Simple Planning Framework

Here's a practical way to evaluate the tax impact of a potential retirement city:

1. Estimate your annual retirement income: Social Security plus pension plus IRA/401(k) withdrawals plus investment income
2. Look up the state's rules for each income type
3. Apply any applicable exemptions—age-based and income-based
4. Calculate your estimated state tax
5. Compare against the same calculation for your current state

If you want to run this side by side for multiple cities at once, the Compare Cities tool puts all the key variables in one view.

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FAQ: Social Security Tax and Retirement Relocation

Q: Does every state tax Social Security benefits?

No. Most states don't. As of 2026, approximately 10 states still have some form of Social Security taxation, though several offer income-based exemptions that eliminate the tax for most retirees.

Q: If I move to a no-income-tax state, will I still owe federal tax on Social Security?

Yes. Federal Social Security taxation is based on your combined income and applies regardless of which state you live in. Moving to Florida or Texas has no effect on your federal tax liability for Social Security benefits.

Q: What's the best state overall to minimize retirement taxes?

That depends heavily on your income mix. Retirees with large IRA balances tend to prioritize income tax rules. Those with valuable homes focus more on property tax. States like Florida, Texas, Nevada, and South Dakota tend to rank well across multiple categories, but your specific situation is what determines the right answer.

Q: Can RetireCityIQ help me compare tax environments?

Yes. The Compare Cities tool lets you evaluate cities across cost of living, taxes, healthcare, and climate side by side. The Retirement Quiz also helps narrow down cities that fit your financial profile.

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Start Here If You're Still Figuring Out Where to Retire

If Social Security taxation is a real concern in your planning, the fastest way to narrow down states is to eliminate the ones that tax benefits with no meaningful exemption for your income level. From there, layer in cost of living, healthcare access, climate, and housing.

The RetireCityIQ Quiz walks you through your priorities and generates a personalized shortlist. Once you have a few candidates, use Compare Cities to run the numbers head to head.

If you're also modeling whether your retirement income can actually sustain your lifestyle in a given city, retirefree.app is a useful tool for projecting retirement income sustainability by location. Worth bookmarking if you're still in the planning phase.

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*Data sourced from state revenue agency guidelines and publicly available tax code summaries current as of early 2026. Tax rules change—verify with a tax professional before making relocation decisions based on state tax law.*