Is Your Retirement at Risk: Social Security is a vital income source for millions of retirees across the United States. But did you know that some states tax your Social Security benefits? In 2025, retirees in several states may see part of their benefits taxed at the state level, potentially impacting their retirement income and lifestyle.
Understanding which states tax Social Security in 2025, and how those taxes work, is essential for financial planning—whether you’re nearing retirement or already enjoying your golden years. This issue doesn’t just affect your wallet today. It can shape long-term decisions, from where you live to how you save and spend.
In this article, we’ll break down the states still taxing benefits, how much they tax, who’s affected, and what you can do to plan smartly. Whether you’re a retiree, a financial advisor, or simply planning ahead, this guide is for you. Let’s dive in.
States Taxing Social Security in 2025 Reveale
| Feature | Details |
|---|---|
| States Taxing Benefits (2025) | Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, West Virginia |
| Full Exemptions Available? | Yes, based on age and income in most states |
| Flat Tax State Example | Utah taxes income at a flat rate of 4.55% but offers limited credits |
| States Phasing Out Tax | West Virginia to fully exempt benefits by 2026 |
| Helpful Resource | Social Security Administration (SSA) |
If you rely on Social Security, understanding how state taxes affect your retirement income in 2025 is more important than ever. While most states no longer tax these benefits, nine still do, each with its own rules and exemptions.
By planning ahead, managing your income, and consulting a tax advisor, you can minimize the tax bite and make the most of your retirement income. Your financial health in retirement depends on smart, informed decisions. Be proactive, stay informed, and create a strategy tailored to your goals.
Retirement should be about enjoying your time—not worrying about unexpected tax bills. With the right planning, you can protect your Social Security and make your money last longer.
Why Do Some States Still Tax Social Security?
Social Security benefits are taxed at the federal level depending on your income. However, only a handful of states also choose to tax these benefits at the state level. The reasons vary: budget needs, tax structure, or slow policy changes.
States that still impose this tax may be trying to generate revenue or haven’t updated their tax codes in decades. Sometimes, state lawmakers aim to balance budgets or fund public services, and retirees become part of the broader tax equation.
While most states have eliminated this tax to ease the burden on retirees, a few still include Social Security in their taxable income, sometimes with thresholds or exemptions for lower-income individuals. This means even within a “taxing state,” not everyone pays.
States That Tax Social Security in 2025
1. Colorado
- Age-based deductions apply.
- Those 65+ can deduct full benefits taxed at the federal level.
- Ages 55-64 can deduct up to $24,000, depending on income.
- Tip: If you plan to retire early in Colorado, make sure your income strategy fits within deduction guidelines.
2. Connecticut
- Benefits are fully exempt if:
- Single filers: AGI < $75,000
- Joint filers: AGI < $100,000
- Above these thresholds, up to 25% of benefits may be taxed.
- Connecticut has also made recent changes to exempt more retirees, especially middle-income earners.
3. Minnesota
- Exemptions based on income:
- Joint filers: AGI < $105,380
- Single filers: AGI < $82,190
- Phased deduction at higher income levels.
- Minnesota is known for a broader tax base, so retirees with other income sources may still face a tax burden.
4. Montana
- Offers a $5,500 subtraction from federal taxable income for those over 65.
- Other deductions repealed in recent tax reforms.
- Some residents were surprised by changes after the repeal of previous income exemptions. Stay updated with new legislation.
5. New Mexico
- No tax for:
- Single filers: income < $100,000
- Joint filers: income < $150,000
- Full tax applies above thresholds.
- Lawmakers have debated eliminating the tax entirely, but budget constraints remain an issue.
6. Rhode Island
- Must have reached full retirement age.
- Exemption thresholds:
- Joint filers: AGI < $130,250
- Single filers: AGI < $104,200
- If you work part-time in retirement, your total income could exceed the limit—plan withdrawals wisely.
7. Utah
- Flat income tax rate: 4.55%
- Offers a Social Security credit or a retirement tax credit of $450 (not both).
- The state has discussed eliminating the tax, which could impact more than 150,000 residents. Stay tuned to policy changes.
8. Vermont
- Full exemption:
- Joint filers: AGI < $65,000
- Single filers: AGI < $50,000
- Partial exemption up to $75,000 / $60,000
- Vermont’s cost of living can be high; factoring taxes into your relocation plans is key.
9. West Virginia
- Phasing out tax:
- 65% of benefits tax-free in 2025
- 100% exemption by 2026
- The change came after bipartisan support for easing retirees’ tax burdens.
Practical Advice for Retirees
1. Know Your State’s Tax Rules
Even if your benefits are not taxed federally, your state might still tax them. Visit your state department of revenue or use official IRS tools to check your local laws. Tax laws can change annually, so keep an eye on state legislature updates and tax commission announcements.
2. Track Your Adjusted Gross Income (AGI)
In most states, income thresholds determine whether your Social Security is taxed. Keep your AGI below those limits by managing distributions from IRAs, pensions, or investments. Talk to a tax advisor about strategies like Roth conversions, charitable distributions, or spreading out withdrawals over multiple years.
3. Consider Moving
If you’re flexible and want to stretch your retirement dollars, consider relocating to a tax-friendly state. States like Florida, Texas, and Nevada do not tax Social Security or retirement income. These states also tend to have no state income tax at all, making them attractive to retirees seeking a lower tax burden overall.
4. Use Retirement Credits
Utah and a few others offer credits to offset taxes. Claiming these may require filing specific forms or schedules—ask a tax professional or use software like TurboTax or H&R Block. A small credit might not eliminate your tax bill, but it can certainly help reduce it.
5. Explore Tax Deferral Options
Delay claiming Social Security until age 70 to receive maximum monthly payments. Also, consider keeping funds in tax-deferred accounts longer to control your annual taxable income.
Expert Tip: Plan Ahead with a Tax Pro
Navigating retirement taxes can be complicated. A CPA or certified retirement planner can help you:
- Forecast future tax obligations
- Strategically withdraw from accounts
- Avoid unnecessary penalties or surprises
This is especially important if you have multiple income sources, like pensions, rental income, or part-time work. An expert can run tax scenarios, calculate your break-even points, and recommend tax-efficient retirement income streams.
Many tax professionals offer annual reviews, which is particularly helpful as state laws and your personal circumstances evolve. Don’t hesitate to schedule a yearly financial check-up.
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FAQs About Is Your Retirement at Risk?
Q1. Are Social Security benefits taxed in every state?
No. As of 2025, only 9 states tax benefits. The majority of states do not tax Social Security income.
Q2. Will more states stop taxing Social Security?
Possibly. For example, West Virginia is ending its tax in 2026. Utah lawmakers have proposed similar changes. Stay updated with your state legislature and budget committee updates.
Q3. Can my federal benefits still be taxed if my state doesn’t?
Yes. The federal government may tax up to 85% of your Social Security based on your total income. This applies across the country, regardless of your state’s stance.
Q4. What’s the easiest way to check my state’s rules?
Visit your state tax agency website, review state tax guides, or consult Kiplinger’s guide. Always verify information with up-to-date sources.
Q5. Do taxes change if I move after retiring?
Yes. Your state of residence usually determines which taxes apply. If you move to a state with no Social Security tax, your benefits might be fully protected. Always check both income tax and property tax implications before relocating.
