9 States That Will Tax Social Security Benefits in 2025 – Is Your State On The List?

Many states in the U.S. have decided to stop taxing Social Security benefits, but some still choose to do so. While several states are already moving toward eliminating this tax, nine states will continue to tax Social Security benefits in 2025. It’s important to understand the rules in your current state or where you plan to retire so you can plan your finances accordingly.

1. Colorado

In 2025, Colorado will still tax Social Security benefits. However, there is good news for those between the ages of 55 and 64. If your adjusted gross income (AGI) is $75,000 or less (for individuals) or $95,000 or less (for couples filing jointly), you can fully deduct the federally taxed benefits. This is a helpful exemption for many Social Security recipients in the state.

2. Connecticut

Connecticut offers a similar tax break. If you’re a single filer (or married filing separately) with an AGI below $75,000, your Social Security benefits will not be taxed. The same exemption applies to married couples filing jointly with an AGI under $100,000. This is beneficial for lower-income retirees who rely on Social Security as a primary source of income.

3. Minnesota

Minnesota provides a good deal for Social Security recipients as well. In this state, married filers with an AGI below $105,380 and individual filers with an AGI below $82,190 will not have to pay taxes on their Social Security benefits. It’s a helpful policy for those living in Minnesota who are on fixed incomes.

4. Montana

Montana offers a tax exemption for Social Security benefits as well. Single filers with an AGI under $25,000 and joint filers with an AGI under $32,000 can deduct all of their Social Security benefits from state taxes. This can result in significant savings for lower-income retirees in the state.

5. New Mexico

In New Mexico, taxes on Social Security benefits are no longer charged for individual recipients earning less than $100,000 annually and for married couples earning less than $150,000. This change makes New Mexico more attractive for retirees looking to minimize taxes on their Social Security benefits.

6. Rhode Island

In Rhode Island, individuals with an AGI below $88,950 do not have to pay state taxes on their Social Security benefits. Married couples with an AGI under $111,200 can also skip the taxes. This exemption is a relief for many retirees who are living on a fixed income.

7. Utah

Utah has a generous exemption for Social Security benefits. If you’re a single filer earning less than $30,000 per year, your benefits will not be taxed. Married couples making less than $50,000 are also exempt from taxation. This policy makes Utah one of the more retiree-friendly states when it comes to Social Security.

8. Vermont

In Vermont, Social Security benefits are not taxed for individuals earning less than $50,000 per year and for married couples earning less than $65,000 annually. This provides a significant tax break for retirees in the state who are on a budget.

9. West Virginia

While West Virginia will eventually phase out its state income tax on Social Security benefits by 2026, it still taxes benefits in 2025. However, there’s an exemption for individuals earning less than $50,000 and for joint filers making less than $100,000. The phase-out will reduce the tax rate by 35% in 2024, 65% in 2025, and eliminate it by 2026.

Why Understanding This Is Important

For retirees and those planning for retirement, knowing whether or not your state taxes Social Security benefits is crucial. It can affect your overall income and financial planning. Tax-free benefits can help stretch your retirement savings, so it’s worth researching your state’s policies, especially if you are considering moving to a new state.

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