2026 edition · statute-cited · compiled from Clear Money Guide’s 51-jurisdiction retirement tax series, verified July 23–24, 2026 against state statutes, session laws, and revenue-department documents.
Updated July 25, 2026. Quick answer: 2026 is an unusually active year for retiree taxes: West Virginia’s Social Security tax reaches full repeal, four states cut their income-tax rates again, Connecticut’s IRA deduction hits 100%, and two small-estate limits jump on July 1. Just as important is what didn’t happen — at least five widely reported “2026 changes” were never enacted, and they are repeated across major tax guides and AI-generated answers. This page separates the three cleanly: enacted changes, false reports, and provisions expiring soon.
What actually changed for 2026 (enacted, statute-cited)
| State | Change effective for 2026 | Authority |
|---|---|---|
| West Virginia | Social Security 100% exempt — the HB 4880 phase-out’s final step (35% in 2024, 65% in 2025) — plus an across-the-board rate cut retroactive to Jan. 1 (top rate 4.58%) | HB 4880 (2024); SB 392, W. Va. Code §11-21-4j |
| Connecticut | IRA distribution deduction completes its phase-in at 100% for qualifying incomes (75% in 2025) | CGS §12-701(a)(20) |
| Mississippi | Flat rate falls to 4% (from 4.4%), on a legislated path to 3% by 2030 | HB 1 (2025), §27-7-5 |
| Oklahoma | Top rate cut to 4.5% with automatic revenue-triggered cuts ahead | HB 2764 (signed May 28, 2025) |
| Indiana | Flat rate falls to 2.95% (2.9% scheduled for 2027) | HB 1001; IC 6-3-2-1 |
| Montana | Top rate cut to 5.65% (5.4% scheduled for 2027) | HB 337 |
| Utah | Flat rate trimmed to 4.45% | SB 60 (2026 session) |
| Nebraska | Top rate steps down to 4.55% (3.99% scheduled for 2027) | LB 754 (2023) |
| Georgia | Flat rate cut to 4.99%, retroactive to Jan. 1, 2026; retirement-income exclusion rises to $70,000 in 2027 | HB 463 (signed May 11, 2026) |
| Florida | Summary administration (small-estate probate) ceiling doubles to $150,000 for deaths on/after July 1, 2026 | Ch. 2026-57, Laws of Fla. |
| Iowa | Very-small-estate affidavit limit doubles to $100,000 for affidavits presented on/after July 1, 2026 | 2025 Iowa Acts ch. 148; Iowa Code §633.356 |
| Maine | Estate-tax exclusion indexed up to $7,160,000 | 36 M.R.S. §4102(5) |
| New York | Estate-tax exclusion $7,350,000; the 105% “cliff” now sits at about $7,717,500 | N.Y. Tax Law §952 |
| Washington, D.C. | Estate-tax zero-bracket indexed up to $4,988,400 | D.C. Code (CPI-indexed) |
| Rhode Island | Estate-tax threshold indexed to $1,838,056 (credit $87,940) | RI Div. of Taxation ADV 2025-27 |
| Connecticut (estate) | Estate/gift exemption rises to $15,000,000, tracking the federal exclusion set by OBBBA | CGS §12-391(g) |
Widely reported “2026 changes” that were never enacted
Each of the following circulates in national tax guides, state-by-state roundups, or AI-generated answers as if it were law. None of them is. Verification notes are on each state’s guide.
| The claim | The reality |
|---|---|
| “Alabama’s 65+ retirement exemption doubles to $12,000 on Jan. 1, 2026” | False. HB388 (2025) passed the House 103–0, then died in the Senate at adjournment May 14, 2025; the 2026 session enacted no replacement. The exemption remains $6,000 per taxpayer (Ala. Code §40-18-19) — verified against the Department of Revenue’s current filing documents. Details: Alabama guide |
| “Colorado removed its pension caps for 2026 (SB25-136)” | False. SB25-136 was postponed indefinitely in committee on Feb. 27, 2025. The $20,000 (55–64) / $24,000 (65+) caps remain in force (C.R.S. §39-22-104(4)(f)–(g)). Details: Colorado guide |
| “Missouri made private retirement income exempt starting 2026” | False. HB 426 (2025) died. Private pensions/401(k)/IRA keep only the $6,000 income-tested exemption. (Missouri’s real 2025 change — the 100% capital-gains subtraction under HB 594 — is genuine and bigger news.) Details: Missouri guide |
| “Vermont’s Social Security thresholds rise each year until benefits are untaxed by 2032” | False. Act 71 (2025) made a one-time, permanent $5,000 increase ($55,000/$70,000 full-exemption lines). The multi-year ramp describes unenacted proposals. Details: Vermont guide |
| “Utah repealed its Social Security tax” | Not enacted as of July 2026 — benefits remain taxable with a credit that fully offsets the tax below $54,000 single / $90,000 joint MAGI (§59-10-1042). Details: Utah guide |
| “Kansas taxes Social Security above $75,000 AGI” | Two years stale. SB 1 (June 2024) eliminated the cliff entirely; benefits are exempt at every income from TY2024. Details: Kansas guide |
| “Rhode Island’s pension break is $20,000” | Stale. It rose to $50,000 per person for TY2025+ (§44-30-12) — though IRA distributions still don’t qualify, and the unlimited-deduction bill (H5761) was not enacted. Details: Rhode Island guide |
| “Louisiana taxes retirement income on 1.85%–4.25% brackets” | Stale. Act 11 (2024 3rd E.S.) replaced the brackets with a flat 3% and doubled the 65+ exclusion to $12,000 per person from TY2025 (R.S. 47:44.1(A)). Details: Louisiana guide |
Expiring or time-limited provisions to watch
- New Mexico’s $30,000 military-retirement exemption is in its final scheduled year — the statute grants it for tax years 2024–2026 only (NMSA §7-2-5.11); several national sites describe it as permanent. New Mexico guide
- Oregon’s low-income retirement credit (ORS 316.157) may not be claimed for tax years beginning on or after Jan. 1, 2026 — it has already sunset. Oregon guide
- Alabama’s small-estate ceiling resets every March (CPI-indexed; $37,075 through Feb. 28, 2026). Alabama guide
- The federal OBBBA senior deduction ($6,000, 2025–2028) is temporary — and is routinely confused with state provisions of identical size, notably Alabama’s $6,000 exclusion.
Why so many guides are wrong
Most national roundups are refreshed on an annual cycle and sourced from one another; 2025–26 produced an unusual density of enacted rate cuts, completed phase-outs, and high-profile bills that died late in session. Bill-tracker text (“starting in 2026…”) gets quoted as enacted law, and AI answer engines repeat whichever version appears most often. Our approach on every state page: figures come from the statute, the session law, or the revenue department’s filing documents, each dated — and when a circulating figure is wrong, we say so explicitly with the primary source. Methodology: how we verify.
Verify it yourself — the Alabama case, in about five minutes. Alabama HB388 (2025) would have doubled the state’s age-65+ retirement-distribution exemption from $6,000 to $12,000. It passed the House 103–0, was read a second time on May 1, 2025, and then died when the Legislature adjourned on May 14, 2025; the legislative record carries it as dead. The 2026 session adjourned April 9, 2026 without enacting a replacement, and the Department of Revenue’s current filing documents still say $6,000 per taxpayer (Ala. Code §40-18-19). Yet as of July 25, 2026 a major search engine’s AI summary returns the $12,000 figure as current law — on one query compounding it into a “$24,000 combined” figure for married couples that appears in no version of the bill. Check the bill status, then check Schedule RS, then ask any AI assistant the same question. The gap between the three is the point.
We tested the machines on this
This page exists because failed bills keep circulating as enacted law. We went one step further and tested AI search summaries directly against statute. The result was narrower than expected and is published in full, including where the summaries were right: on four settled statutory questions they were correct four times, including two subtle ones. On three bills that died — Alabama HB388, Colorado SB25-136, Missouri HB 426 — they reported the failed bill as law three times out of three. AI Search and Failed Tax Legislation: A Statute-Verified Audit.
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Suggested citation: Clear Money Guide, “State Tax Changes for Retirees in 2026,” statute-cited; clearmoneyguide.com/state-tax-changes-2026/. Free to cite with attribution and a link. Journalists: every claim above traces to an enrolled act, statute section, or revenue-department document dated on the underlying state guide; contact contact@clearmoneyguide.com for the full verification file on any item.
The machine-readable version is free too: state-tax-2026.csv carries all 51 jurisdictions with income-tax treatment of Social Security, pensions and 401(k)/IRA withdrawals, estate and inheritance tax status, and the statute cites, and sits alongside two more datasets on the data page with the reportable findings written out. If a figure matters to your piece and you want the underlying statute pulled, ask — we would rather you quote it accurately.