Social Security benefits provide a lifeline for millions of retirees in the United States. Many people are surprised to learn that in some states, these benefits are subject to state taxes.
As we approach 2025, it is critical to understand which states will tax your Social Security benefits and how this affects your retirement planning.
For retirees and those planning for retirement, navigating the maze of taxation can feel overwhelming. But don’t worry—this guide breaks it all down in a clear, approachable way, helping you make informed decisions about your financial future.
Social Security 2025
Topic | Details |
---|---|
States Taxing Benefits | 9 states (Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, WV). |
Exemptions | Income-based exemptions vary by state. |
Recent Changes | West Virginia phasing out taxes by 2026; Missouri & Kansas removing taxes from 2024. |
Federal Tax on Social Security | Up to 85% of benefits taxed federally for higher-income individuals. |
Official Info | SSA.gov provides full details on Social Security taxation policies. |
Planning for retirement requires many considerations, including understanding how Social Security benefits are taxed at both the state and federal levels.
You can better protect your retirement savings by staying up to date on state tax laws and researching strategies to reduce taxable income. Proactive planning can help you have a more financially secure and stress-free retirement.
Why Do Some States Tax Social Security Benefits?
Unlike federal taxes, which are applied uniformly throughout the United States, states have the authority to create their own tax laws. Most states do not tax Social Security benefits, but a few do.
Budgetary constraints and disparities in state revenue structures are frequently the driving forces. These taxes primarily affect retirees with higher incomes, as most states provide exemptions for lower-income individuals.
For example, states that tax Social Security benefits frequently rely more heavily on income taxes to fund critical services like education, healthcare, and infrastructure.
States can balance their budgets by focusing on higher-income retirees while exempting those who rely heavily on Social Security for daily living expenses.
Understanding your state’s policies is critical because they have a direct impact on your retirement income.
Furthermore, with potential changes to federal Social Security programs on the horizon, staying informed can help you plan more effectively for a secure financial future. Let’s get into the specifics of the states that receive tax breaks.
States That Tax Social Security Benefits
1. Colorado
Colorado taxes Social Security benefits, but retirees age 65 and up can deduct all federally taxed benefits on their state tax return. Beginning in 2025, this exemption is extended to individuals aged 55 to 64 with adjusted gross incomes (AGIs) of less than $75,000 for single filers and $95,000 for joint filers. This expansion is especially beneficial to early retirees, who may not yet be eligible for other tax breaks.
2. Connecticut
Connecticut helps lower-income retirees. State taxation does not apply to single filers with an AGI of less than $75,000 or joint filers with an AGI of less than $100,000. For those who earn more than these thresholds, a portion of their benefits may still be taxable, so it is critical to carefully manage taxable income.
3. Minnesota
Minnesota follows a tiered system. Married filers with an AGI under $105,380 and single filers with an AGI under $82,190 are exempt from state income taxes on their Social Security benefits.
For those who exceed these thresholds, partial taxation applies. This tiered approach encourages retirees to consider strategies such as Roth IRA conversions to stay in lower income brackets.
4) Montana
Montana allows retirees with an AGI of less than $25,000 (single) or $32,000 (joint) to deduct all Social Security benefits from their state taxes.
However, retirees who exceed these limits may face higher tax burdens, making Montana less appealing to high-income retirees than tax-friendly states.
5) New Mexico
Individuals and couples earning less than $100,000 and $150,000, respectively, are eligible for exemptions in New Mexico. This makes it more convenient for middle-income retirees. Furthermore, the state is considering reforms to make Social Security fully tax-exempt for more residents, potentially increasing its appeal to retirees in the future.
6) Rhode Island
Rhode Island provides relief to those with an AGI of less than $88,950 (individual) or $111,200 (joint), effectively exempting most retirees. This policy seeks to keep retirees in the state, preventing an exodus to neighboring states such as Massachusetts, which does not tax Social Security.
7. Utah
Utah provides a full exemption to single filers earning less than $30,000 and joint filers earning less than $50,000. Retirees who exceed these thresholds should consider tax-efficient withdrawal strategies to reduce their state tax liability.
8. Vermont
Vermont has tax thresholds of $50,000 for individuals and $65,000 for couples, making it one of the stricter states in terms of taxation. Regardless of taxes, Vermont’s robust healthcare system and social programs may appeal to retirees.
9. West Virginia
West Virginia is phasing out its Social Security taxes. By 2026, retirees will no longer have to pay state taxes on their benefits. This phased approach reflects the state’s determination to create a more retiree-friendly tax environment while meeting its financial obligations.

Federal Taxes on Social Security
It’s important to note that Social Security benefits may be subject to federal taxes. This is how it works:
- Single Filers: Up to 50% of benefits are taxable if your combined income is between $25,000 and $34,000. Above $34,000, up to 85% of benefits are taxable.
- Joint Filers: For combined incomes between $32,000 and $44,000, up to 50% of benefits are taxable. Above $44,000, up to 85% are taxable.
Your combined income is calculated by adding your AGI, nontaxable interest, and half of your Social Security benefits. Retirees can consider adjusting retirement account withdrawals to stay below these income levels and reduce federal tax liability. For more information, visit SSA.gov.
Practical Advice for Retirees
1. Know Your State’s Laws
Examine your state’s tax policies to determine how your Social Security benefits will be affected. Many states provide helpful online resources or calculators. For example, state government websites frequently include tax guides designed specifically for retirees.
2. Consider Relocation
If you live in a high-tax state, consider relocating to a tax-friendly state. States like Florida, Texas, and Nevada do not tax Social Security benefits, making them popular among retirees looking to maximize their income.
3. Optimize Your Income
Work with a financial advisor to structure your retirement income so that it is as tax-efficient as possible. For example, taking income from Roth IRAs or tax-free municipal bonds can help lower your AGI. Advisors can also suggest tax-efficient withdrawal strategies for 401(k)s and traditional IRAs.
4. Stay Updated
Tax laws frequently change. For example, Missouri and Kansas will no longer tax Social Security benefits beginning in 2024. Keep an eye out for updates in your state to ensure you take advantage of any new exemptions or credits that become available.
5. Plan Early
The earlier you begin planning, the better. Addressing potential tax liabilities in your 50s or 60s can help you avoid surprises and increase your retirement savings. Tools such as retirement income calculators can assist you in visualizing various tax scenarios.
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