If you’re nearing retirement or already receiving Social Security benefits, knowing how taxes could impact your monthly income is very important. While the federal government only taxes Social Security under specific conditions, some U.S. states also tax these benefits. In 2025, nine states will continue doing so—making it critical for retirees to understand where their money is going.
With the cost of living rising and people living longer than ever, every dollar counts. This article will help you understand which states will tax your Social Security in 2025, how much they might take, and what you can do to protect your income.
Why Do Some States Tax Social Security?
The federal government taxes Social Security benefits only if your combined income is above a certain level. However, states have the freedom to set their own rules. This means your location directly affects how much of your Social Security income you actually get to keep.
There are three main approaches states take:
- Fully exempt Social Security from state income tax.
- Partially exempt based on income, age, or filing status.
- Fully or partially tax Social Security, often aligning with federal rules.
Some states use these taxes to balance budgets, especially if they’re facing economic pressure. Others may want to shift financial responsibility from other sources. This is why rules often change over time—so it’s vital to stay updated every year.
Here Are the 9 States That Will Tax Your Social Security in 2025
Let’s break down each of the nine states continuing to tax Social Security benefits in 2025 and how their rules work.
1. Colorado (CO): Partial Exemptions Based on Age
Colorado allows deductions based on age. If you’re 65 or older, all federally taxed Social Security income is fully deductible from your state return. But if you’re between 55 and 64, the exemption is capped—$75,000 for single filers and $95,000 for joint filers.
Keep in mind that Colorado also has low property taxes, which might help balance out the tax on benefits depending on your lifestyle and income.
2. Connecticut (CT): Tax-Free for Low to Mid Incomes
Connecticut gives full exemptions for retirees with lower incomes. If your Adjusted Gross Income (AGI) is below $75,000 (single) or $100,000 (joint), your Social Security is completely tax-free. If you exceed those levels, up to 25% of your benefits may be taxed.
Connecticut has a high cost of living, so retirees here need to carefully budget, even if they fall under the tax exemption limits.
3. Minnesota (MN): Follows Federal Guidelines Closely
Minnesota closely mirrors federal taxation rules. If the IRS taxes your benefits, chances are the state will too. However, Minnesota also offers income-based exemptions.
For example:
- Single filers with AGI under $82,190
- Joint filers under $105,380
…may qualify for full or partial deductions. It’s smart to check each year, as tax brackets and deductions can change.
4. Montana (MT): Some Relief for Seniors
Montana does tax Social Security, but offers relief for retirees. If you’re 65 or older, you can deduct up to $5,500 of federally taxable income. If your income goes beyond this threshold, a portion of your benefits may be taxed.
The state offers beautiful landscapes and a calm lifestyle, but make sure you evaluate your total income sources to understand your full tax liability.
5. New Mexico (NM): Becoming More Retiree-Friendly
Starting in 2025, New Mexico will offer full exemptions for Social Security if:
- You’re a single filer earning under $100,000
- You’re a couple earning under $150,000
If your income is above these limits, part of your benefits may still be taxed, though New Mexico’s lawmakers are discussing possible changes to improve senior benefits further.
6. Rhode Island (RI): Age and Income Both Matter
Rhode Island’s rules are a bit more complex. You must be:
- At full retirement age (as per SSA)
- Earning less than $104,200 (single) or $130,250 (joint)
If you meet these conditions, your Social Security income is fully exempt. Otherwise, some of your benefits may be taxed.
7. Utah (UT): Flat Tax With Some Credits
Utah has a flat income tax rate of 4.55%, which includes Social Security income. However, there are non-refundable credits available to reduce the tax burden for retirees.
There’s also active discussion about removing this tax altogether, so residents should keep an eye on new updates from state lawmakers.
8. Vermont (VT): Graduated Exemptions
Vermont offers tax exemptions based on income:
- Full exemption: AGI under $50,000 (single) or $65,000 (joint)
- Partial exemption: AGI up to $59,999 (single) or $74,999 (joint)
Beyond these limits, a portion of your Social Security benefits will be taxed. Vermont is known for its quiet towns and nature, but its overall tax burden is relatively high.
9. West Virginia (WV): Phasing Out Tax by 2026
Good news if you’re in West Virginia: the state is gradually removing taxes on Social Security benefits. In 2025, 65% of your benefits will be exempt. By 2026, all Social Security income will be tax-free.
This makes WV more attractive for retirees, especially with its affordable housing and peaceful lifestyle.
What It Means for Your Retirement Plan
Living in a state that taxes Social Security could reduce the money you have for everyday expenses, travel, or healthcare. That’s why understanding these rules is a key part of retirement planning.
If you’re earning just enough to cross exemption thresholds, you might end up paying hundreds of dollars more in taxes. And for retirees on a fixed income, that difference can impact your comfort and financial security.
Real-Life Example: The Impact of State Taxes
Let’s look at Susan and Mike, a retired couple living in Vermont with a joint AGI of $68,000. Vermont offers a partial exemption up to $74,999 for couples, so only a part of their benefits will be taxed.
If they moved to Texas or Florida—states with no income tax—they could potentially save several hundred dollars each year. That money could go toward travel, medications, or even emergency savings.
4 Practical Tips to Protect Your Retirement Income
- Know Your State’s Current Laws
Tax rules change often. Check your state’s revenue department website every year or consult a local tax advisor to stay informed. - Use Financial Software or Hire a Pro
Taxes in retirement can be tricky. Consider using trusted tax software or speaking with a retirement planner to plan your withdrawals and reduce tax bills. - Think Before You Relocate
Planning to move in retirement? Look at the total tax picture—including property tax, estate tax, and tax on pensions or 401(k) withdrawals. Some states may seem tax-friendly but cost more overall. - Use Trusted Resources
- SSA.gov for Social Security updates
- IRS Publication 554 for seniors
- AARP’s Retirement Center for helpful tools
- State Tax Department websites for local info