Social Security taxes in 2026: 8 states taxing benefits, federal tax limits and retirees' costs

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Social Security taxes in 2026: Check the 8 states taxing benefits, federal income limits and tax exemptions to know how much retirees may owe.

Social Security benefits are not completely tax-free for every retiree in the US. Whether retirees have to pay taxes on their benefits depends on their total yearly income and the state where they live. While most states do not tax Social Security payments, the federal government can still tax a part of these benefits if a person's income crosses certain limits.

Federal taxes can apply to up to 85% of Social Security benefits. However, this does not mean retirees pay an 85% tax rate. It means that up to 85% of their Social Security income can be included in their taxable income. The actual tax depends on their federal income tax bracket, deductions and tax credits, according to Yahoo Finance.

Just over half of Social Security beneficiaries are expected to pay federal taxes on their benefits in 2026, according to the Congressional Budget Office (CBO). The amount they owe depends on their total income, including money received from pensions, retirement accounts, jobs and other sources.

The Internal Revenue Service (IRS) uses a calculation called 'combined income' to decide how much of a person's Social Security benefits can be taxed. This calculation includes three things:

Federal tax rules depend on whether a person files taxes individually or jointly with their spouse. According to the IRS, single filers with a combined income of $25,000 or less do not have to pay federal taxes on their Social Security benefits.

If their income is between $25,001 and $34,000, up to 50% of their benefits can be taxable. If their income is above $34,000, up to 85% can be taxable, according to Yahoo Finance.

For married couples filing jointly, benefits are not taxable if their combined income is $32,000 or less. If their income is between $32,001 and $44,000, up to 50% of their benefits can be taxable. If their combined income is above $44,000, up to 85% can be taxable.

For single retirees, combined income of $25,000 or less means their Social Security benefits are not subject to federal…

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