Every day that passes is one day less for our retirement. Some people long so much for the day when they finally don’t have to get up to work that they start doing the math many years before they even have to think about it. If you are one of those people and you are already planning your retirement, maybe there is something you should know… not all states are going to treat Social Security the same way. Yes, some are going to charge you taxes on what you collect and others are going to allow you to keep every cent that corresponds to you.
The good news is that 2025 is going to be one of those years in which the list of those states that do not apply income taxes is longer.
What is Social Security (SSA) for retirees?
In most cases, it is the only economic support that retirees have, mainly because once they have finished their work activity, they deserve to rest and spend the last stage of their life receiving the same thing that they have given for years. According to the AARP, more than 40% of Americans over 65 receive at least half of their income from Social Security. However, depending on the state you live in (and the amount of money you yourself have contributed to the Administration during your years of contributions) your check will be higher or lower.
How much of your benefits may be subject to taxes?
It is estimated that up to 85% of the money you receive from Social Security may be subject to federal taxes, and you may also be required to pay state income taxes.
Luckily for everyone, the list of states that are eliminating these taxes is growing and now Missouri, Nebraska and Kansas have joined, which is causing many workers to consider moving to these states in order to retire and get their full payment.
Which states are not going to collect taxes?
There will eventually be 41 states that will not tax the benefits you receive from the SSA, so one of the following states could be your next destination if you do not want the state to keep part of your benefits:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Mississippi
- Missouri
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- South Dakota
- Tennessee
- Texas
- Virginia
- Washington
- Wisconsin
- Wyoming
- Washington D.C.
If you live in one of these states, you can breathe easy because your Social Security check will arrive intact since it is tax-free.
Which states will SSA tax?
There are only 9 states that will continue to tax Social Security benefits in 2025:
- Colorado
- Connecticut
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
Luckily, Kansas is no longer on this list and West Virginia is expected to gradually eliminate taxes so that it will join the list of exempt states in 2026.
Brian Kuhn has confirmed that each State has different tax provisions that could make individuals exempt from taxes if they are below certain thresholds or depending on age, because, as we know, each State has its own laws.
How much can retirees save on taxes?
Kuhn also explained that if you live in a state that does not tax Social Security benefits, you can calculate how much you will save on taxes as follows:
- Find the percentage of taxes you pay in your state on your total income.
- Apply that percentage to the total amount you receive from Social Security.
Here’s an example:
Let’s say you live in a state that DOES tax Social Security and your state tax rate is 5% on your income, well:
- You receive $20,000 a year in Social Security benefits.
- If your state did tax Social Security, you would have to pay: $20,000 x 5% = $1,000 in taxes.
- Now let’s imagine that you live in a state that does NOT tax Social Security, you save that $1,000 because that part of your income is not taxed.
It’s very easy, you will have more money because the State does not ask you for anything!