In January 2026, the Social Security Administration (SSA) enacted a cost-of-living adjustment (COLA) for benefit recipients, boosting payouts by 2.8%. This increased the average retiree payment by about $56 per month, from roughly $2,015 to $2,071.
But that amount goes much further in certain states than others, because everyday costs vary widely. That makes where you live an important decision if you want Social Security to cover as much of your monthly expenses as possible.
Three major factors determine whether your Social Security income goes farther:
Cost of living: States with lower housing, food, transportation and services prices help fixed incomes cover more essentials.
State tax treatment: Some states tax Social Security benefits or have high income or sales taxes that eat into retirement income.
Healthcare costs: Since healthcare takes up a large share of retirees’ budgets, states with affordable care and Medicare costs help benefits stretch further.
With that in mind, here are states where Social Security goes farthest in 2026.
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Arkansas isn’t just affordable. It’s actually strategically tax-friendly for retirees. The state doesn’t tax Social Security benefits at all, and retirees can exclude up to $6,000 from individual retirement account (IRA) or pension income, giving older adults several ways to protect more of their income from state taxes. Property tax relief programs for those 65 and older help reduce one of the biggest fixed retirement costs.
Mississippi stands out for low everyday household costs, anchored by one of the lowest cost-of-living indexes in the country. Housing and transportation costs are particularly low in the state.
South Dakota doesn’t tax Social Security or other retirement income, and because everyday costs (especially housing) are below average, retirees often find themselves with more discretionary budget room.
West Virginia is a newly minted retiree tax win: It fully eliminated state tax on Social Security benefits for 2026, after a phase-out period. While the state still has sales and property taxes, retirees no longer have to worry about part of their Social Security being taxed at the state level.
Alabama combines broad affordability with a generous Social Security exemption. Housing costs in Alabama are among the lowest in the nation, and Social Security retirement benefits aren’t taxed at all.
Tennessee doesn’t tax Social Security benefits because there’s no state income tax at all. While sales taxes are higher than average, the overall tax-and-living-cost mix can still favor Social Security recipients planning their budgets.
In Oklahoma, Social Security benefits aren’t taxed by the state, and everyday living costs for housing and groceries tend to run below national averages.
Kentucky doesn’t tax Social Security and also provides exemptions on other retirement income up to certain thresholds. While healthcare and some services can vary in price by region, many communities here offer cost levels below the national average.
The 2026 Social Security COLA was modest at 2.8%, and rising Medicare Part B costs have eaten into that gain for many retirees. Per the Centers for Medicare & Medicaid Services (CMS), Medicare Part B premiums rose significantly — from about $185 to $202.90 — reducing how much of the average $56 monthly COLA many retirees actually keep.
This reality highlights why the relative cost of living matters so much. Even a higher benefit doesn’t always translate into more spending power if other costs, like healthcare, erode that increase.
It’s also worth noting that some states tax Social Security benefits, shrinking the amount of your monthly check that you keep, while others have high sales or property taxes that can undercut retirement income. Before moving, retirees should run the full tax and cost picture for any state they’re considering.
In 2026, stretching Social Security means finding a state that combines low cost of living, lack of taxes on benefits and manageable healthcare costs. Places like Arkansas, Mississippi and South Dakota are perennial standouts for stretching fixed income, while states such as West Virginia and Tennessee add value through tax advantages.
Your individual situation matters, of course. Housing choices, lifestyle and health needs all influence how far Social Security will go. But in the years ahead, where you live might matter as much as how much you get each month.
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This article originally appeared on GOBankingRates.com: 8 States Where Social Security Goes the Furthest in 2026
