Social Security benefits are a vital source of income for retirees across the United States. While these benefits are federally taxed under certain income thresholds, what many retirees might not realize is that some states also tax Social Security income. Currently, nine states impose taxes on Social Security benefits, potentially reducing the monthly income retirees depend on.
If you’re planning your retirement or considering relocating, it’s essential to know which states tax these benefits and how much they could impact your finances.
Which 9 States Tax Social Security Benefits?
The following nine states tax Social Security benefits to varying degrees:
- Colorado
- Connecticut
- Kansas
- Minnesota
- Missouri
- Montana
- Nebraska
- New Mexico
- Utah
Each of these states has its own rules for taxing Social Security, including income thresholds and exclusions that determine whether your benefits are taxable.
State-Specific Rules for Social Security Taxes
1. Colorado
Colorado allows a retirement income subtraction for taxpayers over a certain age, which can reduce the taxable portion of Social Security benefits. However, higher-income retirees may still see their benefits taxed.
2. Connecticut
Connecticut offers an exemption for Social Security benefits if your federal adjusted gross income (AGI) falls below specific thresholds. Married couples filing jointly with an AGI under $100,000 are exempt from state taxes on Social Security.
3. Kansas
Kansas provides a full exemption for Social Security benefits if your AGI is $75,000 or less, regardless of filing status.
4. Minnesota
Minnesota uses the same income thresholds as federal taxation but provides a subtraction for lower-income taxpayers to minimize the burden.
5. Missouri
Missouri exempts Social Security benefits for retirees with an AGI below $85,000 for single filers or $100,000 for married couples filing jointly. Those exceeding these thresholds may see their benefits taxed.
6. Montana
Montana taxes Social Security benefits based on the federal taxation formula, meaning higher-income retirees are more likely to owe taxes on their benefits.
7. Nebraska
Nebraska has been phasing out Social Security taxes. As of 2025, benefits are fully exempt for retirees with an AGI below $60,000 (single) or $100,000 (joint). Higher earners may still face taxes.
8. New Mexico
New Mexico recently passed legislation reducing the taxable portion of Social Security benefits for lower-income residents. Retirees with an AGI below $100,000 (single) or $150,000 (joint) can qualify for exemptions.
9. Utah
Utah taxes Social Security benefits but offers a retirement tax credit to offset some of the burden for middle- and low-income retirees.
How Much Could These Taxes Impact Retirees?
The amount of Social Security income subject to state taxes varies widely depending on your location, income, and filing status. Retirees with higher incomes or additional sources of taxable income, such as pensions or investment earnings, are more likely to face taxes on their benefits.
For example:
- A retiree in Nebraska earning above the state’s exemption limit may see up to 85% of their benefits taxed at the state level.
- In Minnesota, retirees with incomes exceeding federal thresholds could owe both federal and state taxes on their Social Security.
These taxes can significantly reduce your monthly income, making it important to factor state tax policies into your retirement planning.
Strategies to Minimize Taxes on Social Security Benefits
If you live in or plan to move to one of these nine states, there are ways to reduce your tax burden on Social Security benefits:
1. Relocate to a Tax-Friendly State
States like Florida, Texas, and Nevada do not tax Social Security benefits or impose a state income tax. Relocating to one of these states could help you maximize your retirement income.
2. Manage Your Income
Keep your taxable income below the state-specific thresholds by strategically withdrawing from retirement accounts or using tax-free investments like Roth IRAs.
3. Take Advantage of Exemptions
Many states offer partial or full exemptions for retirees below certain income levels. Be sure to understand the rules in your state to avoid unnecessary taxes.
4. Consult a Financial Advisor
A professional can help you develop a tax-efficient retirement plan that minimizes the impact of state taxes on your Social Security benefits.
The Bigger Picture: Federal vs. State Taxes
While federal taxes on Social Security benefits are unavoidable for higher-income retirees, state taxes are only an issue in nine states. Retirees should weigh the pros and cons of living in a state that taxes benefits against other factors, such as cost of living, healthcare accessibility, and overall tax policies.
Conclusion: Plan Ahead to Protect Your Retirement Income
Understanding how state taxes impact Social Security benefits is essential for effective retirement planning. Retirees in the nine states that tax Social Security should explore strategies to minimize their tax burden and maximize their monthly income.
For more information on Social Security taxes and how they apply in your state, visit the Social Security Administration\u2019s official website.
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