Social Security retirement benefits are some of the most liked and awaited benefits that there are in the US. But while the amount you receive after working for a number of years and contributing to the Social Security Administration through your taxes may be, in theory, enough to sustain yourself and maybe your family, what many are not aware of is that in some states you must still pay taxes on your benefits. In fact, there are nine states that require your benefits to be taxed in 2025.
And that is bad news for retirees, as a recent poll by Gallup confirmed that “six in ten retirees said their benefits are a major source of income” and in this economy when every cent matters, missing out on hundreds of dollars a year is not doing them any favors. Of course, it is only nine states, so one could technically choose to move to a state that is more tax advantaged to retirees, but doing so would mean that they would have to leave friends and family behind and start over in a completely new place, with new healthcare providers and potentially higher costs in other areas like housing, so that is not an option for everyone.
The new administration has suggested a potential new measure, contained in the One, Big, Beautiful Bill Act, which passed the House, that would have seniors on Social Security receive an additional $4,000 ($6,000 if Congress’ proposal passes) tax deduction to their existing tax deduction. That would help with the situation a lot, but it is still important to know which states are less tax advantaged and what that means for the retirees that live there.
The states that tax Social Security benefits
This list used to be longer, and little by little states have ceased to tax Social Security benefits because it really does hurt many of the seniors that receive retirement benefits. The latest ones to stop have been Kansas, Missouri, and Nebraska, but Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah Vermont and West Virginia are still holdouts:
In Colorado, residents 65 or older with adjusted gross incomes under $75,000 (or $95,000 for joint filers) are not taxed by the state on their Social Security income. Thos who are younger or those above these income limits can take up to $20,000 from their federally taxable benefits, with any remainder taxed at 4.4%.
Connecticut offers a full exemption on Social Security for single filers earning less than $75,000 and couples earning under $100,000, but anything over this, up to 25% of benefits may be taxed at rates from 4.5% to 6.99%.
Minnesota excludes benefits from taxation for those with incomes below $84,490 (individual) or $108,320 (joint). Each $4,000 of income over the threshold increases the taxable portion of benefits by 10%, with overall rates falling between 6.8% and 9.85%.
In Montana, Social Security income that is taxed at the federal level is also subject to state tax, though residents over 65 can claim a $5,660 deduction. The state applies income tax rates between 4.7% and 5.9%.
New Mexico offers a full exemption on Social Security benefits for single filers earning less than $100,000 and joint filers under $150,000. For those above those thresholds, the entire federally taxable portion is taxed at rates ranging from 4.9% to 5.9%.
Rhode Island does not tax Social Security income for individuals with incomes under $104,200 or couples earning less than $130,250. Once those limits are exceeded, the federally taxable portion is subject to rates between 4.75% and 5.99%.
Utah residents earning under $45,000 individually or $75,000 jointly are eligible for a full tax credit that effectively cancels out state taxes on federally taxed Social Security benefits. Those earning more may still receive a reduced credit but the flat state income tax rate stands at 4.55%.
In Vermont, Social Security income is not taxed for single filers earning less than $50,000 and couples below $65,000. A partial exemption applies to those with incomes up to $10,000 higher but beyond that range of $60,000 for individuals and $75,000 for joint filers, the entire federally taxable portion is subject to state tax, with rates ranging from 3.35% to 8.75%.
West Virginia grants a full exemption for Social Security benefits to individuals making under $50,000 and married couples below $100,000. Above those thresholds, 35% of the federally taxable portion is taxed at rates between 4.44% and 4.82%. It will not be for much longer, as a full exemption for all residents is scheduled to take effect in 2026.