Retirees In These 9 States May Face Taxes On Their Social Security Checks

Social Security benefits serve as a crucial income source for many American retirees. While the federal government taxes a portion of these benefits based on income levels, residents in certain states may also face state-level taxation on their Social Security income.

As of 2025, nine states impose taxes on Social Security benefits, with specific conditions and exemptions varying by state.

Understanding these nuances is essential for retirees aiming to maximize their income and minimize tax liabilities.

Federal Taxation of Social Security Benefits

At the federal level, Social Security benefits are taxable based on a retiree’s combined income, which includes adjusted gross income (AGI), nontaxable interest, and half of the Social Security benefits. The taxation thresholds are:

• Individuals: Up to 50% of benefits are taxable for combined income between $25,000 and $34,000; up to 85% is taxable for combined income above $34,000.
• Married Couples Filing Jointly: Up to 50% of benefits are taxable for combined income between $32,000 and $44,000; up to 85% is taxable for combined income above $44,000.

State Taxation of Social Security Benefits

In addition to federal taxes, the following nine states tax Social Security benefits in 2025, each with its own regulations:

1. Colorado

Retirees aged 65 and older can deduct all federally taxed Social Security benefits from their state taxable income.

Those aged 55 to 64 can deduct benefits if their AGI is below $75,000 (single filers) or $95,000 (joint filers). The state income tax rate is 4.4%.

2. Connecticut

Social Security benefits are exempt from state taxes for single filers with an AGI under $75,000 and joint filers under $100,000.

For incomes above these thresholds, up to 25% of benefits may be taxed, with tax rates ranging from 4.5% to 6.99%.

3. Minnesota

The state taxes Social Security income that is taxable federally. However, retirees may qualify for a subtraction based on income levels.

For tax year 2025, married joint filers with an AGI up to $105,380 and single filers up to $82,190 are exempt. The tax rate ranges from 6.8% to 9.85%.

4. Montana

Montana includes federally taxable Social Security benefits in state taxable income. Taxpayers aged 65 and older receive a $5,660 deduction. The state tax rate ranges from 4.7% to 5.9%.

5. New Mexico

Social Security benefits are exempt from state taxes for single filers with an AGI up to $100,000 and joint filers up to $150,000. Incomes above these thresholds are taxed at rates between 4.9% and 5.9%.

6. Rhode Island

Retirees who have reached full retirement age and have an AGI below $104,200 (single filers) or $130,250 (joint filers) are exempt from state taxes on Social Security benefits. Higher incomes are taxed at rates from 3.75% to 5.99%.

7. Utah

Utah taxes Social Security benefits included in federal taxable income but offers a credit to offset the taxes for lower-income retirees.

The credit phases out for single filers with an AGI above $37,500 and joint filers above $75,000. The state tax rate is 4.55%.

8. Vermont

Social Security benefits are exempt for single filers with an AGI up to $50,000 and joint filers up to $65,000.

Partial exemptions apply for incomes slightly above these thresholds. The tax rate ranges from 3.35% to 8.75%.

9. West Virginia

The state is phasing out taxes on Social Security benefits. In 2025, 65% of such income is exempt, with full exemption scheduled for 2026. The tax rate ranges from 4.44% to 4.82%.

Implications for Retirees

Retirees residing in these states should assess how state taxation will impact their Social Security benefits.

Strategies such as adjusting retirement account withdrawals, considering Roth conversions, or relocating to more tax-friendly states may help mitigate tax liabilities. Consulting with a tax professional is advisable to navigate state-specific regulations effectively.

FAQs

Which states tax Social Security benefits in 2025?

As of 2025, the nine states that tax Social Security benefits are Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Each state has different income thresholds and tax rates.

Are there any states phasing out Social Security taxes?

Yes, West Virginia is gradually eliminating Social Security taxes. In 2025, 65% of benefits will be exempt, and by 2026, no Social Security benefits will be taxed in the state.

How can retirees minimize Social Security taxation?

Strategies include limiting taxable income, utilizing Roth retirement accounts, spreading withdrawals over multiple years to stay within exemption thresholds, and considering relocation to a tax-free state.