These 8 States Could Tax Your Social Security in 2027

Most retirees know the federal government can tax a portion of Social Security benefits depending on income. Fewer realize that where they live also matters. While the large majority of states don't tax Social Security income at all, a small group still taxes at least some benefits, often with exemptions tied to income, age, or filing status.

Tax rules can shift from year to year as state legislatures adjust thresholds or phase out taxation altogether. Several states have been gradually rolling back their Social Security taxes in recent years, so the list of states that still apply some tax keeps shrinking.

Based on currently enacted state tax law, here are the states where retirees may still owe state taxes on Social Security benefits in the 2027 tax year, and what could determine whether that applies to you.

Colorado

Colorado generally includes Social Security benefits in state taxable income, but it offers a subtraction that can offset some or all of that tax. Under Colorado Department of Revenue guidance, taxpayers age 65 and older can generally subtract their full federally taxable Social Security benefit from state income. Taxpayers age 55 to 64 may qualify for a full or capped subtraction depending on income.

This structure means many Colorado retirees, particularly those 65 and older, may owe little or no state tax on their benefits, while some younger retirees or higher earners could still see a portion taxed. Because these subtraction rules and income phase-outs can be adjusted, retirees should check the Colorado Department of Revenue's current-year guidance before assuming their benefits are fully exempt in 2027.

Connecticut

Connecticut taxes Social Security benefits for higher-income residents but exempts many others. According to the Connecticut Department of Revenue Services, single filers with federal adjusted gross income under a set threshold and married joint filers under a higher combined threshold can generally exclude all Social Security benefits from state income tax.

Above those thresholds, Connecticut allows a partial exemption rather than taxing benefits in full. The amount excluded depends on the state's Social Security Benefit Adjustment calculation.

Because Connecticut's thresholds have been subject to legislative adjustment, retirees nearing the income cutoffs should confirm the current-year figures with the Department of Revenue Services rather than relying on prior-year numbers, since 2027-specific thresholds may not yet be finalized.

Minnesota

Minnesota has moved toward exempting most Social Security income but hasn't eliminated the tax entirely. The Minnesota Department of Revenue allows a subtraction for Social Security benefits that phases out as income rises, meaning lower- and middle-income retirees may owe little or no state tax while higher-income retirees could still see a taxable portion.

The subtraction applies based on provisional income and adjusted gross income thresholds that differ by filing status. Because Minnesota adjusts these thresholds periodically, the exact income levels that determine full or partial exemption in 2027 should be confirmed directly with the Department of Revenue closer to tax time.

Retirees with substantial pension income, investment income, or part-time earnings in addition to Social Security are the most likely to see a portion of benefits taxed.

Montana

Montana has historically taxed a portion of Social Security benefits using a formula tied to federal taxable benefits, but the state has been updating its approach to more closely mirror federal rules. According to the Montana Department of Revenue, the state generally starts with the federally taxable amount of Social Security benefits and applies its own adjustments and deductions based on income and filing status.

Retirees with modest total income may find much or all of their Social Security excluded, while those with higher combined income from pensions, wages, or investments could see a larger taxable share. Because Montana's calculation method has been subject to recent legislative changes, retirees should verify the current formula and any applicable deductions with the Department of Revenue before assuming a specific outcome for the 2027 tax year.

New Mexico

New Mexico exempts Social Security benefits for most retirees but still taxes benefits for higher earners. Under guidance from the New Mexico Taxation and Revenue Department, single filers and married couples filing jointly below set income thresholds can generally exclude all Social Security benefits from state taxable income.

Above those thresholds, a portion of benefits may become taxable under the state's standard income tax brackets. New Mexico has adjusted its exemption thresholds in recent years as part of broader tax relief efforts, so the specific income cutoffs that will apply for the 2027 tax year should be confirmed with the Taxation and Revenue Department rather than assumed from earlier years' figures.

Middle-income retirees sit closest to the line and are most likely to see their situation change if thresholds are adjusted again.

Rhode Island

Rhode Island has simplified its Social Security tax exemption in recent years by removing a prior age requirement. According to the Rhode Island Division of Taxation, retirees no longer need to reach a specific age to qualify for the state's Social Security exemption, as of January 1, 2027. Eligibility is now based primarily on income thresholds tied to federal adjusted gross income, which differ by filing status.

Retirees with income below the applicable threshold can generally exclude all Social Security benefits from Rhode Island taxable income, regardless of age. Those above the threshold may still owe tax on a portion of their benefits.

Because this is a comparatively recent change, retirees who previously assumed they didn't qualify due to age should revisit Rhode Island's current rules, since the removal of the age test may make more people eligible for the exemption than before.

Utah

Utah taxes Social Security benefits as part of state income but offers a nonrefundable tax credit intended to offset some or all of that liability for many retirees.

According to the Utah State Tax Commission, the credit phases out as income rises above thresholds that differ by filing status, meaning lower- and middle-income retirees may see the tax largely or fully offset, while higher earners could face a smaller credit and a larger net tax on benefits.

Because the credit calculation depends on both the retiree's income and filing status, two retirees with similar Social Security benefits could see very different outcomes. Utah has adjusted credit thresholds in past legislative sessions, so retirees should confirm the specific phase-out ranges in effect for the 2027 tax year with the State Tax Commission rather than relying on earlier figures.

Vermont

Vermont exempts Social Security benefits for many retirees but applies a graduated reduction in the exemption as income rises. According to the Vermont Department of Taxes, single filers and married couples filing jointly below set adjusted gross income thresholds can generally exclude all Social Security benefits from state tax.

Above those thresholds, the exemption phases out gradually rather than disappearing all at once, so some retirees in a middle-income range may exclude only part of their benefits. Vermont's thresholds have been adjusted in past years to account for inflation, so retirees should check the Department of Taxes' current guidance for the exact income levels that will apply in the 2027 tax year rather than assuming prior-year thresholds still hold.

Why this list could still change

None of this means living in one of these states guarantees a tax bill on your Social Security benefits.

Every state on this list offers some form of exemption, deduction, or credit, and many retirees with modest incomes end up owing little or nothing in state tax on their benefits even in these states. Income level, filing status, age, and other sources of retirement income, such as pensions or withdrawals from a 401(k) or IRA, all factor into the final calculation.

State legislatures also revisit these rules regularly. Several states have reduced or eliminated Social Security taxation in recent years, and others could follow before 2027 returns are filed. Retirees should check their state revenue department's current guidance, or speak with a tax professional, rather than relying on past years' thresholds.

Bottom line

It's worth distinguishing between the 2027 tax year, which covers income received during the 2027 calendar year, and tax returns filed in 2027, which typically report income from the prior year, 2026. Thresholds and rules described here apply to the 2027 tax year unless otherwise noted, and some states haven't yet finalized their exact 2027 figures.

It's also worth remembering that state taxation of Social Security benefits is separate from federal taxation, which uses its own combined-income formula to determine how much of a benefit is taxable. A retiree could owe federal tax on a portion of benefits while owing no state tax at all, or vice versa, depending on where they live and their total income.

Checking both a state revenue department's guidance and the IRS's rules can help retirees get a fuller picture of their retirement income and what they might owe.

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