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Nine States Still Taxing Social Security Benefits in 2025 What You Should Know

Nine States Still Taxing Social Security Benefits in 2025: What You Should Know

Sandy Staggs

For retirees and individuals nearing retirement, understanding how Social Security benefits are taxed can be crucial in financial planning. In 2025, most U.S. states will continue to exempt Social Security benefits from state taxes. However, nine states still impose taxes on these benefits, and it’s important to know the rules and exemptions they offer.

In this article, we’ll explore which states still tax Social Security benefits, explain the exemptions available, and provide tips to help you plan your taxes effectively.

Overview: Social Security Taxation in the U.S.

At the federal level, Social Security benefits are included in combined income calculations and can be taxed if income thresholds are exceeded. While the majority of states have eliminated taxes on these benefits, nine states still tax them to varying degrees. States like Missouri and Kansas removed their taxation in 2024, leaving only a handful of states imposing these taxes in 2025.

Here are the nine states that will tax Social Security benefits in 2025:

  • Colorado
  • Connecticut
  • Minnesota
  • Montana
  • New Mexico
  • Rhode Island
  • Utah
  • Vermont
  • West Virginia

State-Specific Tax Rules and Exemptions

Each of these nine states has specific rules and exemptions designed to provide relief for retirees. Here’s a breakdown:

1. Colorado

Starting in 2025, Colorado residents aged 55 to 64 with an Adjusted Gross Income (AGI) of $75,000 or less (individuals) or $95,000 or less (married couples filing jointly) can fully deduct federally taxed Social Security benefits on their state income tax returns.

2. Connecticut

  • Single filers or married individuals filing separately with an AGI below $75,000 are exempt.
  • Married couples filing jointly are exempt if their AGI is below $100,000.
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3. Minnesota

  • Single filers with an AGI below $82,190 and married couples earning less than $105,380 qualify for full exemptions on their Social Security benefits.

4. Montana

  • Single filers with an AGI less than $25,000 and joint filers with an AGI below $32,000 can deduct all Social Security benefits from state taxes.

5. New Mexico

  • Individuals earning less than $100,000 and married couples earning less than $150,000 annually are fully exempt from Social Security taxes.

6. Rhode Island

  • Single filers with an AGI below $88,950 and married couples earning less than $111,200 qualify for exemption.

7. Utah

  • Single filers with an annual income below $30,000 and married couples with income under $50,000 are exempt from taxes on Social Security benefits.

8. Vermont

  • Married couples with an AGI below $65,000 and individuals earning less than $50,000 qualify for tax exemptions.

9. West Virginia

West Virginia is phasing out Social Security taxes:

  • For the 2024 tax year, benefits are reduced by 35%.
  • In 2025, benefits will be reduced by 65%.
  • By 2026, all Social Security benefits will be fully exempt.

Why Are Social Security Benefits Taxed?

Taxation on Social Security benefits at the state level is often tied to a state’s budgetary needs and policies. At the federal level, the taxation of Social Security benefits applies when combined income—which includes wages, investment earnings, and other taxable income—exceeds specific thresholds. These thresholds differ by filing status.

Tips for Managing Social Security Taxes

  1. Track Your Income: Regularly monitor your total income to ensure it stays below exemption thresholds in your state.
  2. Leverage State Exemptions: Familiarize yourself with your state’s specific exemptions and deductions to reduce taxable income.
  3. Relocation Consideration: If state taxes on Social Security benefits significantly impact your finances, consider moving to a state with no taxation.
  4. Plan Retirement Withdrawals: Manage withdrawals from retirement accounts strategically to minimize combined income.
  5. Consult a Tax Advisor: Seek professional help to navigate complex tax rules and optimize your tax situation.
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Frequently Asked Questions (FAQs)

Q1: Which states don’t tax Social Security benefits?
In 2025, 41 states, including Missouri and Kansas, do not tax Social Security benefits.

Q2: Are federal Social Security taxes the same everywhere?
Yes, federal rules for taxing Social Security benefits are uniform, but state rules vary.

Q3: How can I find out if my Social Security benefits are taxed?
Check your state’s tax rules and consult a tax professional to determine your eligibility for exemptions.

Q4: Are there states phasing out Social Security taxes?
Yes, West Virginia plans to fully eliminate Social Security taxes by 2026.

Q5: Does filing status affect Social Security taxation?
Yes, filing status and income thresholds play a key role in determining whether your benefits are taxed.

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