9 States Will Tax Your Social Security: For millions of retirees across the United States, Social Security benefits serve as a vital source of income—often making up the bulk of their monthly earnings. While these benefits are federally taxed depending on income level, only a select few states still impose their own taxes on Social Security payments. In 2025, the number stands at nine states, each with its own rules, income thresholds, and exemptions. This article breaks down exactly which states tax benefits, how those taxes are calculated, and what steps you can take to avoid or reduce the impact.
Understanding how state-level taxation of Social Security works is essential, especially for those planning retirement, budgeting on fixed incomes, or considering relocating. Many states have chosen to exempt these benefits to support retirees, but others still rely on these taxes for revenue. Let’s dive deep into what this means for you and your family in 2025.
9 States Will Tax Your Social Security
| Topic | Details |
|---|---|
| States That Tax Social Security in 2025 | Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, West Virginia |
| States Offering Partial or Full Exemptions | Most of these states have income-based exemptions |
| Total States with No Tax on Benefits | 41 states + Washington, D.C. do not tax Social Security |
| States Phasing Out Taxes | West Virginia (fully ending by 2026); Utah legislation pending |
| Highest Impact States | Vermont, Minnesota, New Mexico (due to lower exemption thresholds) |
| Planning Tip | AGI (Adjusted Gross Income) is key—keep it below thresholds when possible |
| Federal & State Tax Overlap | You could pay both federal and state taxes if income is above certain limits |
| Official Tax Info Resource | SSA.gov |
Navigating Social Security taxation at the state level may seem daunting, but understanding which states tax benefits—and how—is the first step toward optimizing your retirement income. While the vast majority of U.S. states do not tax these benefits, nine still do in 2025, each with its own rules, income limits, and exemptions.
Whether you plan to stay put, relocate, or adjust your retirement strategy, knowing how your state of residence affects your bottom line can help you make informed decisions. Keep up to date with legislative changes, work with professionals when needed, and always verify your eligibility for exemptions. By taking control of your financial future today, you can retire with greater peace of mind.
Why Do Only a Few States Still Tax Social Security?
When Social Security was first taxed federally in 1983, many states followed suit. Over time, however, most phased out these taxes due to public pressure and concerns about retiree well-being. Today, just nine states still apply some form of taxation on these benefits, generally based on Adjusted Gross Income (AGI) thresholds.
States that still tax Social Security often do so for budgetary reasons—they may lack alternative revenue streams or have broader income tax policies that make exemption more complex. That said, many of these states offer generous exemptions that effectively shield low- to moderate-income retirees.
Still, for retirees who have additional sources of income (pensions, retirement accounts, rental income), understanding whether Social Security is taxed—and how much—can help avoid costly surprises at tax time.
Breakdown: The 9 States That Tax Social Security in 2025
1. Colorado
Residents aged 65 and older can fully deduct federally taxed Social Security from their Colorado taxable income. However, those aged 55–64 are only exempt if:
- Single filers earn less than $75,000
- Joint filers earn less than $95,000
Exceeding those limits could lead to partial taxation. Recent reforms have improved fairness for older residents, but careful planning remains important. (Source)
2. Connecticut
Connecticut fully exempts benefits if:
- Single filers earn less than $75,000
- Married couples filing jointly earn under $100,000
Above these thresholds, up to 25% of Social Security benefits may be taxed. While the state’s overall cost of living is high, the tax impact can often be avoided with careful income management. (Kiplinger)
3. Minnesota
Minnesota has one of the most complex Social Security taxation systems in the U.S. For 2025:
- Joint filers: Benefits are exempt under $105,380 AGI
- Single filers: Exempt under $82,190 AGI
Above those limits, a 10% reduction in the exemption is applied for every $4,000 of excess income. Minnesota’s multiple tax brackets and deductions make it essential to work with a tax advisor. (Source)
4. Montana
Montana closely follows federal taxation models:
- Individuals earning less than $25,000 are exempt
- Couples under $32,000 are also exempt
Above that, Montana applies state income tax on a sliding scale, topping out at around 5.9%. For many retirees, this means watching all forms of income, not just Social Security. (Source)
5. New Mexico
New Mexico adjusted its tax policy in recent years to provide relief:
- No Social Security tax for single filers under $100,000 AGI
- No tax for joint filers under $150,000
However, those with income above these limits face tax rates ranging from 1.7% to 5.9%, depending on their total taxable income. (Kiplinger)
6. Rhode Island
Rhode Island offers a targeted exemption:
- Available to residents who are full retirement age
- AGI must be below $104,200 (single) or $130,250 (joint)
Exceeding those thresholds means your benefits are taxed at the state’s regular rates of 3.75% to 5.99%. (Kiplinger)
7. Utah
Utah uses a flat tax rate of 4.55%, but offers a non-refundable tax credit for many retirees. There’s currently a proposal from Governor Spencer Cox to eliminate this tax entirely, which could:
- Save retirees up to $950/year
- Reduce state revenue by approximately $143.8 million annually
If enacted, Utah would join the majority of states that exempt Social Security. (Axios)
8. Vermont
Vermont exempts Social Security benefits based on income:
- Full exemption for single filers under $50,000; joint filers under $65,000
- Partial exemption up to $59,999 (single) and $74,999 (joint)
Beyond that, benefits are fully taxed. With Vermont’s high cost of living, the tax burden can be significant for retirees who don’t qualify for exemptions. (Kiplinger)
9. West Virginia
West Virginia is in the final stages of phasing out Social Security taxes entirely:
- In 2025, only 35% of benefits will be taxed
- By 2026, all Social Security income will be exempt
This makes the Mountain State increasingly attractive to retirees, especially those with limited additional income. (Kiplinger)
What If You Live in One of These States?
If you’re a resident in one of the nine states listed, here are practical steps to limit or avoid taxes on your Social Security benefits:
Track Your Income and Adjust AGI
Understand how AGI thresholds affect your exemption. Consider spreading income over multiple years or adjusting withdrawals to stay below the taxable limit.
Adjust Retirement Account Withdrawals
Plan 401(k) or IRA withdrawals to avoid a spike in AGI that could cause your benefits to become taxable.
Consider Relocating
States like Florida, Texas, and Nevada have no state income tax, making them attractive for retirees wanting to keep more of their income.
Work with a Tax Professional
A tax advisor can help design a tax-efficient income strategy, optimize deductions, and navigate state-specific rules.
Time Income-Generating Activities
Sell assets or take large withdrawals in years where you’ll otherwise have a lower AGI. Timing can drastically change your tax burden.
FAQs On 9 States Will Tax Your Social Security
Q: Will I always owe federal taxes on my Social Security?
A: Not necessarily. Federal taxes apply if your combined income exceeds $25,000 (single) or $32,000 (joint). Up to 85% of benefits may be taxable federally depending on income.
Q: Is there a way to completely avoid state and federal taxes?
A: Yes. Keeping your income below federal and state thresholds, or living in states that exempt Social Security entirely, can prevent taxation.
Q: Do these tax laws change often?
A: Yes. States like West Virginia and Utah have recently changed or proposed changes. Always check with official state websites or tax professionals.
Q: How do I check my AGI?
A: Look at Line 11 of your IRS Form 1040. That’s your Adjusted Gross Income (AGI).
Q: What other income affects my Social Security tax status?
A: Pensions, wages, dividends, and capital gains all count toward AGI and may push you over taxable thresholds.
