How the 2026 benefit increase will differ by state

Social Security benefit increases are set by a federal formula, but the amount you receive in 2026 depends partly on which state you live in and when you were born. The Cost of Living Adjustment (COLA) — the percentage increase applied to all benefits — is the same nationwide. However, some states tax Social Security income, which means residents in those states may see a smaller net increase in their pockets after state taxes are withheld. Conversely, residents in states with no Social Security tax will keep the full federal increase.

The 2026 COLA percentage has not yet been announced; it will be released in October 2025 based on inflation data from the third quarter. Once that number is set, the increase applies uniformly to all beneficiaries. The difference between states comes down to what happens after the federal payment arrives.

Key Takeaways

  • Thirteen states currently tax Social Security benefits, meaning residents there will see a smaller increase in take-home money even though the federal benefit increase is the same everywhere.
  • The 2026 COLA percentage will be announced in October 2025 and depends on inflation data from summer and early fall of that year.
  • States that tax Social Security are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia.
  • If you live in a state with no Social Security tax, you will receive the full federal increase with no state withholding.

Which states tax Social Security income

Thirteen states currently have a tax on Social Security benefits. These are: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. The tax rate and the income threshold that triggers it vary by state. Some states tax only a portion of benefits; others tax the full amount once you cross an income threshold.

For example, Colorado taxes up to 50 percent of benefits for single filers with combined income above $25,000, while Connecticut taxes up to 75 percent of benefits for single filers with combined income above $25,000. Montana taxes benefits as ordinary income with no special threshold. Each state's rules are different, so the effective reduction in your 2026 increase will depend on your specific state's formula and your total income.

If you live in any other state, Social Security benefits are not taxed at the state level, and you will receive the full 2026 increase without any state withholding.

How state taxes reduce your net increase

When a state taxes Social Security, the tax is usually withheld from your monthly benefit payment. This means your federal benefit goes up by the 2026 COLA percentage, but then a portion of that increase — and possibly a portion of your existing benefit — is sent to the state as tax.

For example, if the 2026 COLA is 2.5 percent and your current monthly benefit is $2,000, your federal benefit would increase by $50. In a state that taxes 50 percent of benefits above a certain income threshold, you might owe state tax on part of that $50 increase, reducing what actually lands in your bank account. The exact reduction depends on your total income, your filing status, and your state's specific tax rules.

The best way to know what you will actually receive is to contact your state's tax authority or review your state's Social Security tax rules online. The Social Security Administration does not calculate state taxes; that is handled by each state's revenue department.

When the 2026 COLA will be announced

The 2026 Cost of Living Adjustment will be announced on October 10, 2025. This date is set by law and does not change. The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August, and September of the year before the increase takes effect.

Once announced, the COLA percentage applies to all Social Security benefits starting in January 2026. Your first payment reflecting the increase will arrive in February 2026 (since Social Security payments are issued in the month following the benefit month). If you live in a state that taxes benefits, that state will begin withholding taxes on the increased amount according to its own rules.

What to expect in your 2026 benefit payment

In January 2026, your benefit amount will increase by the COLA percentage announced in October 2025. If you live in a state with no Social Security tax, this is the amount you will receive. If you live in one of the thirteen states that tax benefits, your payment will be reduced by the state tax owed on your benefits.

You will see the new amount reflected in your February 2026 payment (the payment for January benefits). If you receive your benefits by direct deposit, the new amount will appear in your bank account. If you receive a paper check, the check amount will be higher. If you have Medicare premiums deducted from your benefit, those deductions will be taken from the new, higher amount.

State tax withholding, if applicable, happens automatically. You do not need to do anything to receive the increase or to have state taxes withheld — both occur based on your current benefit and your state of residence.

How to find your state's specific tax rules

Each state that taxes Social Security publishes its own rules and thresholds. The easiest way to understand how much state tax you will owe on your 2026 increase is to contact your state's department of revenue or taxation directly. Many states have online calculators or worksheets that show how much of your Social Security income is taxable.

You can also contact the Social Security Administration at 1-800-772-1213 to ask which state you are registered in for tax purposes. Social Security does not calculate state taxes, but they can confirm your state of residence and direct you to the right state agency. If you have moved to a different state since you began receiving benefits, make sure your address is current with Social Security.

Frequently Asked Questions

Will I owe federal income tax on my 2026 Social Security increase?

Federal taxation of Social Security depends on your total income, not on the state you live in. Up to 85 percent of your benefits may be subject to federal income tax if your combined income (adjusted gross income plus nontaxable interest plus half your Social Security benefits) exceeds certain thresholds. The 2026 increase will be subject to the same federal tax rules as your current benefits. Contact the IRS or a tax professional for your specific situation.

If I move to a different state before 2026, will my state tax change?

Yes. Your state of residence for tax purposes is determined by where you live when you file your taxes. If you move to a state with no Social Security tax, you will no longer owe state tax on your benefits starting in the tax year you move. If you move to a state that taxes benefits, you will owe tax starting that same year. Update your address with Social Security and your state tax authority when you move.

Can I reduce the state tax withheld from my Social Security?

State tax withholding is automatic and based on your state's tax law and your income. You cannot reduce it by changing your withholding elections the way you can with federal income tax. Your only options are to move to a state with no Social Security tax or to work with a tax professional to understand deductions or credits that might lower your overall state tax liability.

What if I live in a state that taxes Social Security but moved there after I started receiving benefits?

State tax on Social Security applies based on your state of residence at the time you file taxes. If you moved to a taxing state after you began receiving benefits, you will owe state tax on your benefits starting in the tax year you moved. Contact your state's revenue department to understand the specific rules and any transition provisions that may apply.